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Carbon credit boiler rooms: What you need to know and what to do if you’ve been scammed

Carbon credit boiler rooms: What you need to know and what to do if you’ve been scammed | Timberland Investment | Scoop.it

REDD-Monitor has reported several times on sales of carbon credits in the UK, from what seem to be boiler room operations. The Metropolitan Police recently put out, “The Little Book of Big Scams” (pdf file, 3.9 MB), explaining how to avoid these and other scams and providing advice on what to do if you are the victim of an investment scam.

***

The National Fraud Intelligence Bureau has a warning page on its website about carbon credit scams: “The reality is victims are handing over their savings for worthless vouchers from an unregulated market, with individual losses running into hundreds of thousands of pounds.” NFIB’s website includes the following information and advice:


    • If you buy carbon credits you WILL NOT make any money no matter what the salesman says.


    • Companies will not offset their carbon allowance by buying carbon credits from individuals – as the salesman claims.


    • Companies will purchase carbon credits from other companies/brokers and these deals take a lot of time to set up and are heavily regulated – for this reason carbon credits are not investments that an individual can make money on.


    • There is a heavily regulated market for carbon credits and this is the market that the salesman will be referring to. However individuals do not invest in this regulated market. What the salesman will actually sell you is what is known as a “voluntary” carbon credit where environmentally conscious small businesses and individuals pay to off-set their carbon emissions. This is not a “regulated” carbon credit.


    • These are bought by the salesman for around 50p and sold to victims for a massively inflated priced dressed up as carbon credits from the “regulated” market.
      If the salesman believes that the victim has more money to invest they may even give a return on the initial small investment to build confidence in the victim. They will then request a larger investment promising higher returns. The victim will jump at the chance and then lose all their money.


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richard's curator insight, December 17, 2013 3:27 AM

If you have bought carbon credits and you want to know the truth you need to take a look at this report.

 

Regardless of what you have been told it is best to come to terms with reality so you don't lose even more money.

 

 

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.


We encourage readers to interact with our site:

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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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Plum Creek Timber's (PCL) CEO Rick Holley on Q3 2014 Results

Plum Creek Timber's (PCL) CEO Rick Holley on Q3 2014 Results | Timberland Investment | Scoop.it

Excerpts from Plum Creek's recent earnings call:

***
David Lambert - Senior Vice President and Chief Financial Officer
Third quarter real estate segment sales were $69 million towards the upper end of our initial expectations for the quarter. Operating income was $34 million, as Rick mentioned, we closed on approximately $25 million of HBU sales from the former MeadWestvaco lands. These particular lands captured average prices of about $2,800 per acre. These sales help boost our average HBU sales price to more than $2,400 per acre this quarter.


In general, prices per rural lands have been stable. Prices in the Lake States and Gulf South continue to be attractive and offer premiums to underlying timberland values. Despite encouraging signs of increased buyer interest this summer. Prices in certain markets like Florida, Georgia and Montana remained below the levels, where we are willing to transact. As you saw in our separate press release this afternoon, we have signed a $134 million purchase and sale agreement with the Nature Conservancy for the sale of approximately 165,000 acres of timberlands in Montana and on the east side of the Cascades in Washington state.
***
Rick Holley - Chief Executive Officer
Our consistent investment in our timberlands has increased their productivity. This combining with portfolio moves, we've made over the past decade have served the company and our shareholders well. Through these actions, we've improved the quality and productivity of our timberland portfolio. For example, our portfolio of Southern lands is more productive today, than it was 10 years ago.


Their weighted average site index and objective measure of their productivity to-date is 75, a decade ago, it was 66. In Dollar terms, the side index improvement alone is worth more than $500 per acre. During the quarter, we continue to review our capital allocation alternatives including timberland acquisitions and share repurchases. It was clearer, by repurchasing company stock, now we could effectively acquire timberlands, lands that we know very well at a significant discount to their intrinsic value.
***
Let's return to the macroeconomics environment for a moment. The pace of economic recovery, since the end of the great recession has been uneven and difficult to predict. I want to update you on our current thinking. We believe the slow pace of growth, we've experience this year is likely to continue into the coming year. There hasn't been an uptick in residential construction that we and many experts thought, would have occurred by now.
***
The current competitive timberland market provides us a potential opportunity to create real shareholder value. We've witnessed a widening divergence between prices paid for timberland and private market transactions and timberland value implied by our stock price. This disparity has created the potential to conduct a value accretive arbitrage by selling timberland at full private market price and using the proceeds to repurchase shares and retire debt. [Editor note: thanks to Jack Bridges at http://www.scoop.it/t/risk-adjusted-returns for bringing this one to our attention]
***
Collin Mings - Raymond James
Thanks for that detailed updated on your outlook. Most of my questions have been answered, but just a couple of things I wanted to address. As I relates to the kind of the appetite you're seeing out there in the timberland value, that you see that might be beneficial for you take advantage of the arbitrage between what transactions are getting done out versus your share price. Who do you see being the logical buyer of a lot of the timberlands that you might look to market? Do you see kind of resurgence in interest from TIMO, did you see other timber REIT's out there, knock on your door looking for deals or how do you think about the seller to take advantage of that, market arbitrage?


Rick Holley - Chief Executive Officer
You know, Collin I think it's both. You know clearly the institutional market continues to be an active buyer, but they're also an active seller, but a very active buyer in the marketplace. You know timber REIT's have been active as we have from time-to-time in buying assets in the market place, so you know if we take something to market, it's likely to be more of an auction type situation and we will take it to anybody that we thinks has an interest and looking to grow their portfolio. So I mean, these would be good lands, they just maybe less attractive to us and hopefully more attractive to somebody else.

Sam Radcliffe's insight:

So Plum Creek is ready to sell into what it essentially thinks is an overheated institutional market, while Potlatch recently paid richly for 200,000 acres in the South. They can't both be right can they?

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Jack D Bridges's comment, Today, 2:33 PM
Thanks for the tip-of-the-cap, Sam. It will be interesting to follow how Plum tries to capture the spread you so astutely pointed out months before bank analysts in the space. In particular, I'm curious to see which wood-basket holdings get trimmed, and how Plum packages the lands for sale (acreage size, fiber supply agreements, etc.). We know Mr. Richard Molpus is poised to write some overly large cheks ...maybe Mr. M. will help Plum divest in the Lake States in one fell swoop?
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Molpus Woodlands Group Announces the Final Closing of Fund IV with $662.5MM in Commitments

Molpus Woodlands Group Announces the Final Closing of Fund IV with $662.5MM in Commitments | Timberland Investment | Scoop.it

The Molpus Woodlands Group, LLC (Molpus), a timberland investment management organization (TIMO), headquartered in Jackson, Mississippi, has announced today, the final closing of Molpus Woodlands Fund IV, L.P., with commitments of $662.5 million, inclusive of commitments to parallel funds, (collectively, the "Fund").  The Fund was oversubscribed and exceeded its target of $500 million in twelve months from the first close.

The Fund received support from both new and existing investors.  A diverse, international group of limited partners made commitments to the Fund, including public and private pension plans, endowments, insurance companies, family offices and high net-worth individuals.

"With the closing of the Fund, we plan to deploy this capital by acquiring and actively managing a diversified portfolio of timberland properties," said Edgar Marshall, VP Business Development for Molpus.  "We look forward to evaluating new opportunities in North America that meet the Fund's objectives."

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Record volume of Southern Pine lumber exports to China

Record volume of Southern Pine lumber exports to China | Timberland Investment | Scoop.it

Exports of Southern Pine lumber to China are soaring, thanks to promotional efforts funded by the USDA’s Market Access Program (MAP).


Southern Pine lumber exports to China are expected to reach $54 million this year, a ten-fold increase since the U.S. wood products industry began promoting this species, grown in the southeastern United States. Meanwhile, Chinese demand for pressure-treated Southern Pine lumber, a key value-added item produced in the U.S., is forecasted to reach $15 million this year, an all-time sales record and 245% above levels five years ago.


The Southern Forest Products Association (SFPA), a nonprofit trade association representing Southern Pine lumber manufacturers, leverages USDA Foreign Agricultural Service (FAS)-administered Market Access Program (MAP) funds to promote Southern Pine lumber exports. This funding allows the U.S. forest products industry to expand sales in existing markets and enter new emerging markets. Over recent years, MAP funds have helped SFPA sponsor exhibits at trade fairs and to translate technical product literature into Chinese.


As a result, interest in Southern Pine lumber has grown sharply: U.S. companies participating in MAP-sponsored events last year reported immediate sales of nearly $2.2 million and estimate another $16.5 million in sales over the coming months, thanks to contacts made at the trade events.

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RISI Highlights Trucking Shortage

RISI Highlights Trucking Shortage | Timberland Investment | Scoop.it

RISI’s September International Woodfiber Report, while reiterating ongoing concerns about the logging capacity deficit, notes that “a trucker shortage now tops US timber capacity concerns,” citing—among other sources—published FRA surveys and reports.


Nationwide, for all trucking sectors, one trucking association estimates a current shortage of 35,000 “qualified” drivers, “with that number expected to surge five-fold in ten years,” in view of high turnover rates.


For forest product haulers specifically, the raft of burdensome regulations—CSA, above all—as well as other federal regulations and state and local restrictions pinch the driver pool, as do rising insurance rates, while volatile diesel prices and new engine standards add additional operational expenses.


RISI cites several recommendations that have emerged from FRA’s engagement with the issue: work to reform CSA; improve communications between mills, loggers, and truckers; make reducing truck turnaround time a priority; and enact gross vehicle weight reform.

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Climbing Hardwood Prices Floor Home-Building Industry

Climbing Hardwood Prices Floor Home-Building Industry | Timberland Investment | Scoop.it

The U.S. housing market is facing a new headwind — a jump in the cost of hardwood prices. The hike also is escalating the price of wood pallets.

Against the backdrop of rising raw materials prices, most of the American hardwood flooring manufacturers have been forced to raise prices on finished goods. Some announced hikes at the beginning of the summer, while others increased prices in September.

Hardwood prices actually began their long climb in early 2013. Since then, they have reached record highs. According to the Bureau of Labor Statistics, hardwood prices are now over 40 percent higher than they were in 2009. Several factors have fueled this dramatic surge in prices.

First, overseas demand, particularly from China, has swelled over the past few years. Second, the U.S. housing recovery has helped boost domestic hardwood demand. Although annual housing starts are well below their demographically driven normal level of 1.5 million units, they’re still twice as high now compared to 2009.

Finally, on the supply side, the Great Recession upended the lumber industry. Mills closed and workers struggled to find employment in other professions. Although demand is returning, it takes time to reopen mills and attract workers back to the industry.

At the same time, adverse weather conditions have taken a bite out of supply. Also, there was a wetter-than-normal spring this year, and lastly, access to timberland has been limited. As a result, hardwood availability is struggling to match the swelling tide of demand, said Charlie McCarren, economist with the Pricing & Purchasing Service at IHS, in an interview with My Purchasing Center.

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Buyers for paper mills don’t grow on trees

Buyers for paper mills don’t grow on trees | Timberland Investment | Scoop.it

It’s a drill Rosaire Pelletier has been through many times.


A Maine paper mill closes, and Pelletier, the governor’s senior adviser for forest products, is handed the task of trying to find a buyer. The state gets involved because, more often than not, tax breaks and other aid are needed to make a deal come together.


“It’s not an easy job,” concedes Pelletier, a 40-year veteran of the paper industry who uses an impressive list of contacts to market Maine’s shuttered mills. But declining demand for the type of paper Maine specializes in, coupled with increasing competition, does not create an ideal seller’s market, especially when the most recent mill owners couldn’t make a go of it.

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P&C Quarterly Newsletter

Sam Radcliffe's insight:

In addition to an excellent overview of conditions in our operating regions, see the last section for current perspectives on the institutional timberland investment world.

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Is another housing bubble sneaking up on us?

Is another housing bubble sneaking up on us? | Timberland Investment | Scoop.it
Nick Timiraos points to an interesting IMF chart today. It breaks the world into two sorts of countries. The first, which includes the US, UK, Spain, and others, saw a big housing bubble during the aughts and a big housing bust during the Great Recession. The second, which includes Canada, Germany, and others, had only a modest runup in housing prices during the aughts and a correspondingly small decline during the Great Recession.

So what's happening now? Well, countries that already had a housing bubble continue to struggle. Housing prices today are more than 20 percent below their 2007 peak. And the other countries? Well, they're having their own housing bubble now, with prices nearly 30 percent higher than their previous peak.
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Investors bet the farm on agriculture

Investors bet the farm on agriculture | Timberland Investment | Scoop.it

***

The Renewable Resources fund at GMO started adding agriculture to its timber portfolio in 1998. This is a big advantage in marketing terms, since it has an established record, unlike many funds. “When you look at the universe of managers, the first challenge is the lack of record, the lack of clarity about whether they can actually manage operationally,” says Ms Zinurova.


Although timber and agriculture have many similarities, with both depending on biological growth for the larger part of the yield, timber is much less vulnerable to price volatility, as the trees can simply be stored “on the stump” if prices are unattractive. A further significant difference is that the returns on forestry investment have been driven almost entirely by biological growth, with just 8 per cent driven by changes in the value of the land, according to Olivier Lebleu, head of non-US distribution for Old Mutual Asset Managers, whose subsidiary Campbell Global manages $7bn of forestry and natural resources.


That is very different from farmland, where the returns historically have been driven equally by biological yield and capital appreciation.


However, like timberland, farmland is a long-term investment. With 15 years regarded as a short lifespan for a fund, this makes private equity and property seem like short-term investments. In this time horizon, it is inevitable that sustainability becomes an issue. There is an increasing awareness of the pressures on the environment, as well as the near certainty of big increases in the global demand for food as the population grows, and demands a higher standard of living.

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Sierra Pacific levels corruption allegations in renewed legal fight over Moonlight fire

Sierra Pacific levels corruption allegations in renewed legal fight over Moonlight fire | Timberland Investment | Scoop.it

The incendiary legal battle over responsibility for the Moonlight wildfire, which scorched 65,000 acres in the Sierra Nevada seven years ago, has flared anew with charges of corruption and cover-up leveled at federal prosecutors, and state and federal investigators.


The allegations are contained in hundreds of pages of documents filed Thursday in U.S. District Court in Sacramento seeking to wipe out a 2012 settlement calling for timber giant Sierra Pacific Industries to pay the federal government $47 million and deed it 22,500 acres of its land to compensate for the devastation of more than 40,000 acres in two national forests in Plumas and Lassen counties, as well as the U.S. Forest Service’s firefighting costs.
***
The company contends federal prosecutors sat by in pretrial depositions and knowingly allowed the California Department of Forestry and Fire Protection and U.S. Forest Service investigators to “repeatedly lie under oath about the very foundation of their investigation.”
***
One of the documents Sierra Pacific filed is a declaration from a veteran former assistant U.S. attorney, who says he was forced to give up his position as the government’s lead lawyer in the Moonlight case, apparently because he rebuffed pressure from a superior to “engage in unethical conduct as a lawyer.”


The declaration from E. Robert Wright says he was bounced out of the case by his boss, David Shelledy, chief of the civil division in the U.S. attorney’s office, and replaced by a prosecutor with no previous experience in wildland fire recovery cases.
***
Although Sierra Pacific agreed to a settlement in 2012 to end its legal fight with federal authorities, it has always contended the fire investigation was flawed and that investigators manipulated evidence and lied under oath about where and how the blaze began.


According to Sierra Pacific, the government could reach into the company’s deep pockets for a big recovery only if it could blame the company for the fire, and that is what motivated investigators to move the blaze’s place of origin to the area where the bulldozer was working and then falsely deny they had originally settled on a different location.

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Amazonas Florestal expands land holdings by 25,000 acres and increases timber inventories

Amazonas Florestal expands land holdings by 25,000 acres and increases timber inventories | Timberland Investment | Scoop.it

Amazonas Florestal, Ltd. has purchased 5 rural properties in the municipality of Borba, State of Amazonas, Brazil. These 5 properties will add approximately 25,000 acres to Amazonas land holdings and will increase the Company's timber inventories by approximately 5%. The addition of these properties brings the Company's total land holdings to more than 100,000 acres, as Amazonas Florestal said in the press release received by Lesprom Network.


Mr. Bruce W. Barren, CEO, stated, " The acquisition in Borba represents an important addition in our sustainable management projects in that once licensed and approved for harvest in 2015, it can potentially add 440,000 cubic metres of tropical hardwood trees to our present inventory and supply upwards of 22,000 cubic metres yearly on a 20 year plan to local mills. We have signed an intent to lease a major production mill in the adjacent area next year that would have the capacity to process the full amount that could become available once the SFMP (Sustainable Forest Management Project) in these lands are approved which we anticipate to take place in the second quarter of next year."

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Ernst & Young agrees to pay $8 million to settle Sino-Forest allegations

Ernst & Young agrees to pay $8 million to settle Sino-Forest allegations | Timberland Investment | Scoop.it

The Ontario Securities Commission has agreed to an $8 million settlement agreement with giant auditing firm Ernst & Young LLP over its work for two defunct companies operating in China. The deal with Ernst & Young, approved Tuesday by OSC vice chairman James Turner, is the first time that a new “no contest” rule is being used. That means Ernst & Young neither admits or denies the allegations set out by the OSC staff in the cases of Sino-Forest and Zungui Haixin Corp.


Sino-Forest, a forestry company, was listed on the Toronto Stock Exchange while Zungui Haixin, a footwear and apparel company, traded on the Toronto venture exchange. Both companies raised millions from investors in Canada, but eventually questions were raised about fraudulent practices with overstated assets and revenues.
***
As well, Chisholm noted that Ernst & Young officials have agreed to co-operate with the OSC in an ongoing case against Sino-Forest’s executives, including making partners and executives available to testify.
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In a statement of allegations filed in 2012, the OSC said Ernst & Young failed to conduct their audits in accordance with relevant industry standards, including performing sufficient audit work to verify Sino-Forest Corp.’s ownership and existence of its most significant assets.
***
Hearings are currently under way at the OSC against five former executives of Sino-Forest Corp. accused of fraud.

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US timberland, unusually, outperforms farmland

US timberland, unusually, outperforms farmland | Timberland Investment | Scoop.it

Timberland has, for the first time in four years, proved a better investment than farmland, as the improved world economy drives demand for wood for both construction and energy.

US timberland returned 1.47% in the July-to-September quarter, the best performance for the period in seven years, according to the National Council of Real Estate Investment Fiduciaries (Ncreif).

It also, narrowly, outstripped the 1.45% returned by farmland – a rare occurrence.

In the past decade, only on two previous occasions– the first quarter of 2007 and the second quarter of 2010 – has timberland returned more than farmland, on Ncreif data.

The outperformance in the latest quarter was driven by value appreciation, which came in at 0.74% for timberland compared with 0.48% for farmland.

On income, the other factor incorporated in the Ncreif data, farmland fared better, returning 0.97%, compared with 0.73% for forestry.

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Asset owners to push for better alignment, value

Asset owners to push for better alignment, value | Timberland Investment | Scoop.it

Asset owners, which have long been relatively passive players in a financial system dominated by banks and money managers, are poised to play a more active role in shaping that system, predicts David Neal, managing director of the A$104.5 billion (US$91.5 billion) Future Fund. That's partly a function of the “professionalization" of big funds, which increasingly bring sufficient resources to the table to determine where the “rents are being taken out of their … cash flow, who's taking what cuts, and who's adding what value in the value chain,” Melbourne-based Mr. Neal said in a recent interview. In addition, technology that's leveled the playing field between agents and investors, as well as cheaper access to data, are providing asset owners with the ability “to systematize these things in such a way that we can do a lot of this ourselves, if we want to,” he said.
***
Fees are clearly at the center of that discussion, but lowering fees isn't necessarily the end game, said Mr. Neal. While “there's too much rent being extracted,” the issue is one of alignment and value for money rather than the absolute level of fees, he said. “It's fine to pay high fees where there's high value being added,” but high fees shouldn't be seen “as a matter of course,” Mr. Neal said.


Agents such as investment banks and money managers will increasingly face pressure to change their cultures and fee structures from two sources. The first is insourcing, which has been popular with the large Canadian funds, effectively saying “we don't need to pay fees to you guys; you're not aligned with us, so we're going to do it ourselves,” said Mr. Neal.
***
The second source of pressure will come from organizations such as the Future Fund, which are required to use external managers, pushing — mandate by mandate — for better alignment.
***
Eventually, he predicted, pressure from asset owners will push those agents to adopt a culture more in line with other professions, such as accountants and lawyers, where the first order of business is making sure “your client is benefiting from what you're doing.”

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Plum Creek to sell 117,000 acres at Placid Lake, Gold Creek to Nature Conservancy

Plum Creek to sell 117,000 acres at Placid Lake, Gold Creek to Nature Conservancy | Timberland Investment | Scoop.it

Plum Creek Timber Co. has agreed to sell about 117,000 acres around Placid Lake and the Gold Creek drainage northeast of Missoula to the Nature Conservancy for $134 million.

“They are among the most ecologically diverse and intact biological systems remaining in the United States,” Plum Creek spokeswoman Kate Tate said in a written release on Monday afternoon. The deal also includes 48,000 acres on both sides of Interstate 90 between Snoqualmie Pass and Ellensburg in western Washington, in the heart of the Cascades Mountain Range.

The land will be transferred in two phases. The first should close by the fourth quarter of 2014, while the second will close in the first quarter of 2015.

The Nature Conservancy partnered with Plum Creek to transfer 310,000 acres to public and conservation ownership in the Montana Legacy Project which finished in 2010.

Sam Radcliffe's insight:

$1,145 per acre

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Potlatch (PCH) Q3 2014 Results - Earnings Call Transcript

Potlatch (PCH) Q3 2014 Results - Earnings Call Transcript | Timberland Investment | Scoop.it

Some excerpts re PCH's recent acquisition of 201,000 acres from RMS in Alabama and Mississippi:

***

Mike Roxland - Bank of America Merrill Lynch

Just two quick questions and I'll turn it over. On average, you know, you paid over, as Mike mentioned over $1,900 an acre. Is there any HBU potential associated with some of the new acreage you acquired?

Eric Cremers - President and COO
Yeah, absolutely. Like any large land purchase, you would expect there to be some acres that have got move value as HBU or real estate play than what the timberland is going to be worth just from a timber management value alone. And we estimate roughly 15,000 acres of HBU in total will get sold off of these properties over the coming years. It's not going to happen all at once, it will take time, but yes, there's very clearly an HBU opportunity here.

***

Gail Glazerman - UBS
Hi, good afternoon and congratulations on the deal. Just maybe a few more questions on the deal and then some on the markets. Is the average age class and mix, and I appreciate you'll give us more details next quarter, I mean, can you give a sense of how that compares to your Arkansas land?

Eric Cremers - President and COO
Yeah. What I would tell you is it's a very evenly split age class spread across the spectrum of zero to traditional maximum age in the South, might be 30 or 35 years. This is pretty even-aged timberland, so it's pretty straightforward from that standpoint.


As Mike indicated, it's fairly well-stocked. It's got over 10 million tons of timber on it. And it's, relatively speaking, it's traditional southern timberland. It's about 70% fine plantation, 25% hardwood. So, nothing unusual there. And it's been very well-managed, as Mike indicated, by RMS. They've chosen genetically improved seedlings and they've had a pretty aggressive fertilization program over the years. So it's good timberland.

***

Paul Quinn - RBC Capital Markets
Yeah, thanks very much, and congratulations on the acquisition. Just a couple of questions on that. I know that RMS property comes with some timber supply obligations. Maybe you could give us some background on what those are, the length and the percentage that's covered in terms of the harvest.

Eric Cremers - President and COO
Yeah, there are some supply agreements that come with those properties. I won't get into the details of the supply agreements, but it's roughly 350,000 tons per year of pulpwood and roughly 50,000 tons per year of saw logs.

***

Yeah, for the next few years. The pulpwood contract drags out farther than the saw log contract. And all of the mills that are under these contracts, you know, we spent a lot of time looking into them, they're all first and second quartile mills, so they're very competitive mills.

Paul Quinn - RBC Capital Markets
Okay. And my understanding, that's a volume commitment but pricing is off what?

Eric Cremers - President and COO
Yeah, it's off of local market data in the particular wood basket, and it's adjusted on a quarterly basis.

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Potlatch Corporation Signs Purchase Agreement for 201,000 Acres of Alabama & Mississippi Timberlands

Potlatch Corporation Signs Purchase Agreement for 201,000 Acres of Alabama & Mississippi Timberlands | Timberland Investment | Scoop.it

Potlatch Corporation (Nasdaq:PCH) announced today its third quarter 2014 results and that it has signed a purchase agreement to acquire 201,000 acres of timberlands in Alabama and Mississippi from affiliates of Resource Management Service, LLC for $384 million. The transaction is expected to close late in the fourth quarter of 2014 and is subject to the satisfaction of customary closing conditions.


"We are pleased to add these very productive timberlands to our southern portfolio," said Michael Covey, chairman and chief executive officer of Potlatch Corporation. "The timberlands have been managed intensively and are well stocked. This transaction will expand our southern ownership by almost 50% into two new states contiguous to our existing Arkansas holdings and will increase our total acreage under management to nearly 1.6 million acres," concluded Mr. Covey.

Sam Radcliffe's insight:

$1,910 per acre, about $200/acre more than Plum Creek paid  a year ago for 500,000 acres from MeadWestvaco

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Altered Forest Tree Composition Not Due To Global Warming

Altered Forest Tree Composition Not Due To Global Warming | Timberland Investment | Scoop.it

We can blame man for the altered composition of Eastern forests, but not climate change, according to a researcher in Penn State's College of Agricultural Sciences.

Forests in the Eastern United States remain in a state of "disequilibrium" stemming from the clear-cutting and large-scale burning that occurred in the late 1800s, contends Marc Abrams, a professor of forest ecology and physiology. And since about 1930, the Smokey Bear era, aggressive forest-fire suppression has had a far greater influence on shifts in dominant tree species than minor fluctuations in temperature.

"Looking at the historical development of Eastern forests, the results of the change in types of disturbances -- both natural and man-caused -- are much more significant than any change in climate," said Abrams. "Over the last 50 years, most environmental science has focused on the impact of climate change. In some systems, however, climate change impacts have not been as profound as in others. This includes the forest composition of the eastern U.S."

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Supreme Court takes on Hofmann challenge

Supreme Court takes on Hofmann challenge | Timberland Investment | Scoop.it

In a rare and surprising move, the N.C. Supreme Court on Friday “snatched” the long-running and controversial Hofmann Forest case from the state appeals court, along with a couple other high-profile cases, including private school vouchers.


Ron Southerland, one of the lead plaintiffs in a case that’s seeking to require N.C. State University to get an environmental assessment prior to selling the 79,000-acre forest in Onslow and Jones counties to two private firms, said Monday that he and others are still trying to figure out exactly what the change means and how to proceed in the case.


Southerland said James Conner, the attorney who is representing him and other sale opponents, said the Supreme Court had indicated it could hear the case as early as Nov. 17, which is the date by which the school plans to close the sale to Hofmann Forest LLC and Alabama-based Resource Management Service, a Timber Investment Management Organization that is known for sustainable commercial forestry.


“It would seem to us that a pending decision by the state Supreme Court might be a pretty good reason to put off that closing, but that won’t necessarily be the case,” Southerland said Monday. “We’re not exactly sure why the Supreme Court did this, but there are at least a couple of theories.”


The first, which is the more optimistic, is that the Supreme Court has been under political pressure to take more cases and with an election approaching, saw the Hofmann case as an important one that could decide several big issues, such as the opponent’s contention that the state environmental policy act applies to sale of the land and whether the state’s environmental constitutional amendment, adopted back in 1972, truly holds water.
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The second, more cynical theory, is that the Supreme Court, which has a majority of conservative judges, simply wanted to decide the case instead of letting a possibly more unpredictable appeals court make the ruling, which was due any day.

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The Supreme Court “snatch” – Southerland’s word for it – is but the latest twist in a long-running saga full of them. Instead of selling the entire forest to Hofmann Forest LLC – headed by Jerry Walker, an Illinois-based agribusiness owner, NCSU announced in early September that it will now sell 56,000 acres to Resource Management Service and only 23,000 acres to Hofmann Forest LLC, firm formed by Illinois agribusiness owner Jerry Walker.


Instead of a $150 million payoff from a sale that was to have taken place by June 30, the university is to receive as much as $140 million: $131 million from the sale and $9 million more if the buyers are able to negotiate a deal to sell training rights on and over the forest to the U.S. military or to sell protection rights to a conservation group.
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Now, Southerland said, it appears there will be oral arguments before the Supreme Court, and the sale opponents might also have to prepare new written briefs. There is some thought being given, he said, to asking that the courts temporarily block the sale so the Supreme Court case need not be hurried.

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Cambridge MA Allocates 2.5% to Timber

Cambridge MA Allocates 2.5% to Timber | Timberland Investment | Scoop.it

The Cambridge Retirement System of Cambridge, Mass., wants to expand the private equity footprint of its $1.1 billion portfolio, after a roughly two-year hiatus from new commitments in that space. The city pension fund bolstered its alternatives and private equity allocation target and carved out a brand new allocation to infrastructure, said a person familiar with the matter. Members of the board in September approved a new long-term goal to allocate 9% of the pension fund’s assets to private equity, according to documents.


Cambridge previously slotted private equity and timber in an alternatives bucket with a 7.5% target allocation, according to the pension fund’s most recent investment report. Since the pension fund revamped its portfolio mix, dedicated carve-outs of 2.5% have been created for each timber and infrastructure. The inclusion of infrastructure marks a new investment direction for the pension fund, said the person.

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Timberland Investment Fees and Returns

Timberland Investment Fees and Returns | Timberland Investment | Scoop.it

This post includes excerpts from Forisk’s timberland investment research and Brooks Mendell’s September 2014 presentation at the “Who Will Own the Forest?” conference in Portland, Oregon. The complete presentation is available here.


During the ten-year period from January 2004 through December 2013, annualized returns for timberland investments – both direct ownership (8.4%) and equity plays in public timber REITs (9.4%) – outperformed the broader stock market (5.2% for the S&P 500). Basically, timberland investments provided the desired stability and diversification through a distressing economic cycle.

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The table above includes data from 11 TIMOs covering 11.9 million acres of private timberlands in the United States. The analysis separates commingled funds, which pool investments from multiple investors, from separate accounts, which manage funds from specific institutions separately. The “net” returns subtract all investment management advisory fees, including paid and unpaid performance incentive fees.

 

The implied annual fees are consistent with Forisk analysis of prospectuses and contract structures, which find that TIMO incentive pay representing an “overage” or “carried interest” of 10 to 20% above a hurdle of 7 to 8% nominal is common. In addition, the implied fees are consistent and in line with ranges reported by Mercer at WWOTF for other non-timber asset classes. Specific to timberland, Forisk research found average total fees from 2005 through 2012 of 84 basis points.

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Japan: Gov't ordered to pay damages over failed forestry investment program

Japan: Gov't ordered to pay damages over failed forestry investment program | Timberland Investment | Scoop.it

A western Japan court on Thursday ordered the government to pay 85 people a combined 91 million yen in damages for failing to sufficiently warn them of the risks of investing in a state-run forestry program that ended in failure. The Osaka District Court ruled the farm ministry's Forestry Agency had neglected to warn investors of the risk of losing money in the "green owner" program, which involved investing in the growing of state-owned forests in exchange for a share of timber sales.


Roughly 86,000 people invested a total of around 50 billion yen in the program from its start in 1984 until the government stopped accepting new investment 15 years later. It was in 1993 that pamphlets promoting the program began carrying a disclaimer stating there was no warranty of capital. Over 90 percent of the investments ended in losses.


Presiding Judge Masaru Sakamoto said of the program prior to the revision of the pamphlets in 1993 that "the government had a responsibility to dispel any misunderstandings that returns would not fall below par of investments."
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A group of 240 people, mostly over the age of 60, had sued the government for around 500 million yen. They claimed phrases in the pamphlets such as "a long-term contract on a safe, sure asset" made it appear that profits were guaranteed, despite timber prices being on a downtrend.

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Jake & Ethan dragon slayers's curator insight, October 16, 4:49 PM

This article is very helpful and knowledgeable of what is going on in japan. It also shows the troubles that are going on in Japan.

 

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Alternative Assets Top $5.7 Trillion

Alternative Assets Top $5.7 Trillion | Timberland Investment | Scoop.it

Total global alternative assets under management have hit $5.7 trillion, according to new research from Towers Watson. In its latest Global Alternatives Survey, the data provider examines seven alternative asset classes—hedge funds, private equity, real estate, infrastructure, commodities, real assets and illiquid credit, the latter two appearing for the first time this year. 


The survey found that the top 100 alternative investment managers together managed $3.3 trillion. Within this top 100, real estate managers accounted for the largest share of assets under management (over $1 trillion or 31%), followed by private equity managers ($753 billion or 23%), hedge funds ($724 billion or 22%), private equity funds of funds ($322 billion or 10%) and funds of hedge funds ($173 billion or 5%). Infrastructure managers accounted for 4% and commodities managers for 2%.

Sam Radcliffe's insight:

For context, institutional investment in timberland is probably in the $50 billion range, which is 5% of the top 100 real estate managers AUM, or 0.9% of all alternative AUM.

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Partners Group closes largest-ever RE ‘secondaries’ strategy

Partners Group closes largest-ever RE ‘secondaries’ strategy | Timberland Investment | Scoop.it

Partners Group has raised $1.95bn (€1.54bn) for its global real estate ’secondaries’ strategy as interest from investors rises. The investment manager said Partners Group Real Estate Secondary 2013 was “heavily over-subscribed”, following strong interest from institutional investors. The capital raise was claimed to be the largest for a programme dedicated to trading in real estate fund and portfolio interests on the secondary market.
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The real estate secondary market is still fairly young when compared to that in private equity. “We see more activity in this space, it’s becoming a more established market,” Neuenschwander said. “It’s not as competitive as the private equity space.” Real estate portfolios, including single assets and joint venture portfolios, will be bought on the secondary market on behalf of clients.
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There is, Neuenschwander added, no shortage of opportunity – both as a consequence of the financial crisis but also as investors begin to reassess their assets and reshuffle portfolios. “We have a bias towards solutions where funds are close to their maturity,” he said. “We are looking at the whole range but we want to remain selective.”

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Another blow to Maine's paper industry: Verso Paper to close Bucksport mill

Another blow to Maine's paper industry: Verso Paper to close Bucksport mill | Timberland Investment | Scoop.it

Hundreds of mill workers from across the state will find themselves without jobs at the beginning of the holiday season after Verso Paper Corp.’s sudden announcement Wednesday that it will close its paper mill in Bucksport effective Dec. 1. More than 500 employees will be out of work in the third mill closure in Maine this year, dealing a severe blow to the town of 5,000 people, which derives 47 percent of its tax revenues from the Verso mill.
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“The Bucksport mill unfortunately has not been profitable for a number of years, in spite of our employees’ dedicated efforts to make it so. Our assessment indicates that it is impossible for the mill to achieve profitability in today’s marketplace,” Dave Paterson, Verso’s president and CEO, said in a statement posted on the company’s website.


The Maine paper industry, which has been reeling from weak demand, high energy costs and foreign competition, has seen its workforce cut by half since 2000. Paper manufacturing employed 12,847 people in Maine in 2000, but it had dwindled to 6,913 by 2012, according to data provided by the state Department of Labor.
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Verso Paper is headquartered in Memphis, Tennessee, and owns three paper mills, including two in Maine and one in Michigan. Its paper products are used in media and marketing applications, including magazines, catalogs and commercial printing.


The closure will reduce Verso’s annual coated groundwood paper production capacity by about 350,000 tons and its specialty paper production capacity by about 55,000 tons, or about 39 percent of Verso’s output in Maine. Its Androscoggin Mill in Jay produces more than twice the amount of pulp as the mill in Bucksport, and about one-third more paper.


In February, Great Northern Paper furloughed 216 workers at its East Millinocket mill and has since filed for bankruptcy. In August, Old Town Fuel and Fiber announced it was closing its pulp operation and laying off 180 people. That facility is now for sale.


Verso is trying to merge with NewPage Holdings, but it has turned into a protracted negotiation that has gone on since January. Verso Paper is on track to complete the merger by the end of the year, according to its most recent Securities and Exchange Commission filing.

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