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Economics of forest and forest carbon projects - Translating lessons learned into national REDD+ implementation

Economics of forest and forest carbon projects - Translating lessons learned into national REDD+ implementation | Timberland Investment | Scoop.it

The ‘Economics of forest and forest carbon projects - Translating lessons learned into national REDD+ implementation’ report draws lessons on finance options and barriers related to project activities from the forest sector. It investigates the economics of implementing forest and REDD+ projects through a number of case studies from Africa, Latin America and Asia, by analyzing real forest and REDD+ investments. The report sets out to advise policymakers, financial sector stakeholders and project developers on how to structure REDD+ initiatives and implement national REDD+ strategies, especially in relation to attracting private and/or public investments.

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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.

 

We encourage readers to interact with our site:

  • Click on the Follow  button (upper left), and Scoop.it! will deliver a summary of our new content to your inbox every morning.
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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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US timberland transactions poised to double over five years

US timberland transactions poised to double over five years | Timberland Investment | Scoop.it

Investors frustrated by the dearth of primary timberland transactions in the US will soon have reasons to cheer, according to specialist manager New Forests.

 

In its biennial update on the forestry market, the Australia-based firm observes that assets acquired “in the heyday” of 2003-2008 are now starting to be sold back into the secondary market. Rising interest rates may also put pressure to improve cash yields, creating volatility for returns and prompting investors to delist assets. Taken together, these trends will help bring annual timberland transaction turnover in the US from about $1 billion over the past seven or eight years – net of big consolidation deals – to $2 billion over the next half-decade, New Forests said.

 

Not every investor, however, will be inclined to part ways with assets held in the vehicles they back. “It is likely that most funds will sell down their holdings, but there may be some instances where a follow-on vehicle will be used to roll over the assets,” David Brand, chief executive of New Forests, told Agri Investor. “We understand there are some LPs looking to hold on to underlying assets – particularly for large, quality assets – even amidst fund exits.”

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Business Owners Choose Impact Investments Over Charity

Business Owners Choose Impact Investments Over Charity | Timberland Investment | Scoop.it

Business owners are more apt to make impact investments instead of donating to charities to help solve social ills, according to a new finding.

 

The 2017 U.S. Trust Insights on Wealth and Worth survey, in which more than 800 high-net-worth individuals shared their thoughts on investing, the workplace, family relationships, philanthropy and more, shows that business owners are more likely to invest in organizations that make a positive impact versus non-business owners, who are more likely to turn to charity for social effect.

 

“Business owners are less likely to make financial charitable contributions compared to non-business owners, but are actively engaged in supporting nonprofit organizations and causes through their work, investments and service,” the report says. “By far, business owners see the private sector, and businesses in particular, as most effective at creating economic opportunity and, in turn, a higher standard of living for more Americans.”

 

Women and millennials are leading the investment charge to impact imvesting, but interest in impact investing by men has doubled in the past two years, the survey finds.

 

Some other notable takeaways from the U.S. Trust survey:

• 45 percent of high-net-worth investors own or are interested in impact investments.

• More than half (55 percent) of those who own impact investments say they invest based on impact simply because it’s the right thing to do as a responsible citizen and investors.

• Four in 10 investors agree that companies that have a positive impact also have better financial performance.

• One in three agrees that companies that do well as good corporate citizens are less susceptible to headline risks. 

• Eight in 10 high-net-worth investors overall agree that all public companies have an impact on society or the environment.

• Two-thirds of baby boomers and three-fourths of mature investors don’t consider investing as a way to express their social, political or environmental values.

• The number of high-net-worth investors who have reviewed their investment portfolio for the environmental, social or governance impact of companies they invest in has increased to 34 percent, up from 23 percent in 2015.

• The biggest barrier to impact investing adoption continues to be the belief that doing well (investment performance) and doing good (philanthropy) are separate goals (49 percent), a sentiment felt most strongly among older high-net-worth investors.

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Foreign investment crucial for forestry industry

Foreign investment crucial for forestry industry | Timberland Investment | Scoop.it
New Zealand First leader Winston Peters said the future of forestry and timber supplies for local mills is one of his party's priorities as it heads into coalition talks.

He wanted the next government to protect wood supply to domestic mills by creating a Forest Service, and had previously stuck-up for Northland wood processors who said they were being squeezed out of the market by foreign forest owners and buyers.

Commercial forestry is a much bigger industry than most people think, with $25 billion to $30bn invested in plantations, the association's president Peter Clark said.

"It is widely acknowledged in Treasury, MFAT, and trade advisors, that we need foreign direct investment. Forests are pretty benign and logical place to have that investment."

Forestry has not been viewed as an attractive investment here compared to farming intensification.

More government interest is needed in the industry, as well as new plantings, he said.

"There's been a market failure. We've had 20 years of virtually no new planting and this is the main problem. We have heard a lot from Winston's electorate in Northland about wood supply into sawmills and that is absolutely correct and the major cause of it is no new planting. So, there is a gap."
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UMaine gets $455K for 'mass timber' commercialization center

UMaine gets $455K for 'mass timber' commercialization center | Timberland Investment | Scoop.it
The University of Maine System has landed a $454,532 federal grant to create a center to accelerate the use of Maine-sourced timber and engineered wood composites in place of steel and concrete for larger construction projects.

In a joint statement announcing the grant from the U.S. Economic Development Administration, U.S. Sens. Susan Collins, R-Maine, and Angus King, I-Maine, said the funding would be used to create the Maine Mass Timber Commercialization Center as a resource for forest industry partners, trade organizations, construction firms, architects and other key stakeholders to revitalize and diversify Maine's forest-based economy.

Its chief focus would be to advance new forest products technologies and bring innovative mass timber manufacturing to Maine.
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The timber industry illustrates exactly what’s wrong with international trade restrictions

The timber industry illustrates exactly what’s wrong with international trade restrictions | Timberland Investment | Scoop.it

In the August 4 issue of the Wall Street Journal, the CEO of a US lumber company claimed that “our trade laws exist to protect American businesses and jobs from unfair foreign trade practices, allowing our industries to grow and prosper.” His concern for American businesses and workers is commendable, but trade laws restricting our ability to do business with foreigners — even foreigners whose governments subsidize exporters — cause some industries to “grow and prosper” by causing other industries to shrink and struggle.

 

Let’s think about international trade restrictions on the timber industry for a minute.

Tariffs, quotas, and other restrictions on international trade make timber more expensive. With higher prices, timber companies can hire more people. It would be easy to look at the expanding timber industry and draw the conclusion that protection allows American firms to “grow and prosper.”

That conclusion would be wrong. Just because a policy makes some American industries “grow and prosper” doesn’t mean the policy makes all American industries “grow and prosper.” In the case of restrictions on the timber trade, the higher costs and higher employment in the timber industry mean that money and labor aren’t going into other American industries. Specifically, higher timber prices mean higher costs for timber-using industries like construction, paper, and furniture. Higher costs mean lower output in these industries, which means they either don’t grow as rapidly as they otherwise would have or they contract outright.

Trade restrictions have several important effects.

First, they take money out of the pockets of consumers, who have to pay higher prices for timber and timber-using goods.

 

Second, they draw resources into timber production. This sounds good until we realize that these resources could be used more advantageously elsewhere. Instead, they are being wasted producing timber that would have been cheaper had American companies been able to buy it at the world price without government interference.

 

Third, there is less economic activity overall. At the world price, people would have bought more timber. When intervention raises prices, people buy less timber.

There is a final cost associated with tariffs and other protections on international trade. Legislators have to be persuaded to vote for particular pieces of legislation, and persuasion isn’t free. Firms and trade associations dedicated exclusively to influencing the course of legislation have lobbying outfits in Washington, DC, and other seats of government. These groups produce nothing.

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USDA Fails to Monitor Foreign Owners of Farmland (and Timberland)

USDA Fails to Monitor Foreign Owners of Farmland (and Timberland) | Timberland Investment | Scoop.it

A law requiring foreign investors to report transactions of farmland to the U.S. Department of Agriculture has been on the books for almost 40 years.

 

But as the amount of foreign-controlled farmland doubled in millions of acres between 2004 and 2014, the USDA has lapsed in enforcing the law, a review of USDA documents has found.
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About 27.3 million acres of agricultural land in the United States are controlled – either owned or under a long-term lease agreement – by foreign investors, according to a USDA database of foreign investment in farmland. The land, roughly the size of Tennessee, is worth $42.7 billion.

 

But, since 2011, the USDA has only assessed 10 fines under the law, worth $115,724, according to records obtained by the Midwest Center for Investigative Reporting through the Freedom of Information Act. And no fines were assessed in 2015, 2016 or so far in 2017.

 

Lesa Johnson, the manager of the USDA program, acknowledged her office does not review the filings for completeness or accuracy. She said her office also does not investigate to see if companies with foreign ownership file these forms because of a lack of staff and resources.

 

Even before the recent downturn in enforcement, the USDA only assessed 187 penalties between 2004 and 2010, valued above $667,000. But the largest fine of $111,266 during that time, which made up a sixth of the total, was the result of a company self-reporting its lack of compliance with the law.
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Under the act, every foreign person or entity that acquires at least 10 percent interest in agricultural land must file what is known as an FSA-153 form. Agricultural land is defined as a parcel of land at least 10 acres in size or that could produce $1,000 in revenue from agricultural activities.

 

The form requires disclosure about a broad number of things, including how the project is financed, who the owner is and where the owner is from.

Penalties for not filing within 90 days can be as severe as a fine of up to 25 percent of the fair market value of the land.
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Because the USDA has little capability to review filings of foreign investors, the result is that the USDA relies on companies to report errors.

 

For example, in 2010, a team of attorneys at Atlanta law firm Morris, Manning & Martin realized they had failed to file a $98.9 million purchase of 55,000 acres of Alabama, Mississippi and Tennessee timberland. The firms’ corporate and realty teams had miscommunicated, and no one had filed the FSA-153 form with the federal government, according to Rebecca Vandiver, then an attorney at the firm.
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Records show the form was required because their client, RMK Select Timberland Investment Fund I, LLC, a timber investment management organization, had ownership interest from Denmark.
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Morris, Manning & Martin decided to voluntarily file late, which would result in an $111,266 fine, covered by malpractice insurance, rather than be in noncompliance.

 

But Vandiver said that it didn’t appear the federal government would have ever known the fund was in noncompliance if the firm hadn’t self-reported. And records and comments from the USDA confirm her perception.

 

The fine for RMK Select Timberland Investment Fund I, LLC, was the largest fine since at least 2004, enforcement records show.
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“With a lot of these LLCs, finding out who the investors are would not be easy, to be honest,” Vandiver said.

 

Because of that difficulty, getting around the filing requirement— either by negligence or intention — would not be that hard, Vandiver said.

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Portfolios with farmland, timber deliver better returns: global research

Portfolios with farmland, timber deliver better returns: global research | Timberland Investment | Scoop.it
Australian super funds are showing a greater willingness to invest in farmland and timber at a time when new global research shows diversification into alternative real assets can deliver improved returns.

"We're getting requests for more information, more meetings and the conversation is continuing," said John Goodreds, head of alternative solutions at US investment giant Nuveen (formerly TIAA), which has more than $1.1 trillion of assets under management.

Australian super funds remain hugely underinvested in agriculture, which makes up just $2.6 billion of the more than $2.2 trillion of retirement savings they manage.

"One of things we are finding when we talk to clients and educate them is that sophisticated investors need data. They need to know how adding new asset classes to their portfolios will benefit them," Mr Goodreds told The Australian Financial Review.

To provide better data, Nuveen undertook new research, examining portfolio returns over the past 25 years, to demonstrate the potential of farmland, timberland and commercial real estate to improve the risk-adjusted returns of traditional portfolios consisting of stocks and bonds.

Over the past 25 years, the report found that real assets provided "similar or higher returns than stocks with much lower volatility, resulting in higher risk-adjusted returns".

"Farmland also had higher risk-adjusted returns than bonds, with timberland equal to and real estate lower than bonds," the report found.

Between 1992 and 2016, stocks delivered an average annual return of 8.78 per cent, bonds 6.07 per cent and commercial real estate 8.68 per cent. By comparison farmland delivered an average annual return of 11.98 per cent and timberland 10.34 per cent.

The report also found that while a traditional portfolio of stocks and bonds delivered an annual average total return of 6.49 per cent, adding farmland (to 43 per cent of the portfolio) lifted the return to 8.74 per cent.

It concluded that "private real assets offer institutions compelling potential to enhance risk-adjusted returns, based on low correlations with other asset classes, and serve as inflation hedges".
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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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New Zealand forestry a first test in nationalist party's protectionist agenda

New Zealand forestry a first test in nationalist party's protectionist agenda | Timberland Investment | Scoop.it
Some New Zealand forest owners are suspending replanting of trees and re-thinking investments as the country’s third-largest export earner finds itself in the sights of maverick politician Winston Peters’ protectionist agenda.

The election king-maker last week said he would prioritise a restructure of the forest industry in closely-watched coalition talks with major parties after last month’s inconclusive election result.

The plan includes a possible quota system which would force growers to favour local mills over a higher-paying export market. Exports of forest products totalled around NZ$4.75 billion (£2.5 billion) in 2015, with China the top destination.

That has put the Pacific nation’s lucrative forestry sector at the heart of concerns that New Zealand First in power will spell greater government intervention in New Zealand’s small, outward facing economy.

“Every time the government has done something like that we get what you call a hole in the supply of timber and we’re going into a hole now, an undersupply,” said Joe Carr, the owner of a privately-held logging business managing 500 hectares of forest in the far north of the country.

Carr is holding off replanting 60 hectares of his land due to the possible restrictions and said on average growers were paid a third less to sell logs locally than to export them. He said his son was re-thinking whether his family should stick to forestry after 44 years in the business.
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Touching wood for timber REITs

Touching wood for timber REITs | Timberland Investment | Scoop.it

A mix of powerful factors have injected sap into REIT returns this year. Yet US interest rate rises could soon start tilting the balance toward their private peers.

 

The S&P 500 shot past the 2,500 mark for the first time in its history this month as the US Federal Reserve chief Janet Yellen hinted at a tightening of monetary policy, boosting treasury yields and US equities in the process.

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Less noticed has been the strong performance of timber real estate investment trusts. The Forisk Timber REIT index, which tracks all publicly traded timberland-owning REITs, is up about 12 percent in 2017. That not only beats the S&P 500, it also vastly surpasses both the NAREIT All REIT index and NCREIF Timberland, which covers timber transactions in the private markets.
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What’s driving such appetite? Start with the permanent. Timber REITs have an edge over private alternatives in that they are more liquid: their shares can be bought or sold on a daily basis, while the direct acquisition of timber holdings typically requires longer time frames, higher overheads and starting capital. They also pay no corporate tax on their earnings, with taxes being levied instead on shareholders’ dividends.
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Listed timber companies are also being buoyed by solid demand for wood. The main driving factor is the recovering US housing sector. Home builders are reporting a spike in housing starts: these are up 4 percent overall and 8 percent for single-family starts in 2017.
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But timber REITs have also benefitted from more specific factors. First is what they did to shore up their value: maximizing operating revenues and consolidating higher quality portfolios, which led them to divest non-core assets and bolster cash efficiency.

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Second is a more arcane matter. In July, Vanguard, the world’s second-largest provider of exchange trade funds, asked shareholders to swap the index it uses for its $35 billion real estate ETS to a different index that includes timber REITs. Insiders reckon this is pushing hundreds of millions of fresh capital into the asset class.


Yet the outlook is more uncertain. While the economic recovery looks sturdy, other factors may prove to be one-off boosts. And timber REITs could soon be hitting a bump: markets currently put odds for a December US interest rate hike at 80 percent; timber REITs, which tend to trade on a multiple of cash yield, could be cast in a less favorable light than unlisted timber, which is typically backed by investors seeking to maximize total returns. REITs could find themselves under pressure to improve cash yields, making returns more volatile.

 

Historically, this has been the case. Only privately held timberland demonstrated positive returns each year of the period 2012-16, according to Forisk. This is in part because private valuations, done more periodically, tend to be less volatile; it is also because markets tend to discount the value of listed illiquid assets. Timberland REITs have a had a good run so far this year. Upcoming pressures, however, may prompt some assets to branch off and go private.

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Roseburg Forest Products completes acquisition of timberlands in southeastern US

Roseburg Forest Products completes acquisition of timberlands in southeastern US | Timberland Investment | Scoop.it
Roseburg Resources Co. has announced the acquisition of approximately 158,000 acres of investment-grade timberland in the southeastern United States from Forest Investment Associates (FIA), a timberland investment management organization.


The timberland is located around Roanoke Rapids, largely within the coastal region of North Carolina and southeastern Virginia, and has a strong history of professional management. The acquisition was completed Sept. 28, 2017.


“The property is an accretive addition to Roseburg’s Western-based timberland portfolio, with close proximity to broad, stable markets,” Roseburg Senior Vice President of Resources Scott Folk said. “With an attractive age class distribution and above-average site productivity, the property represents significant long-term value for the company, as Roseburg seeks to diversify and grow its timber holdings.”

Roseburg currently owns and sustainably manages over 630,000 acres of timberland in Oregon and California, largely composed of Douglas fir.


“This acquisition advances Roseburg’s planned expansion into the southeastern U.S., where steady housing starts and healthy markets create stable demand for high-quality timber,” Roseburg CEO Grady Mulbery said. “The region’s welcoming business environment and potential for growth also factored into our decision to add the property to our portfolio.”

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U.S. state pension plans returned a median annualized 5.9% over 10 years

U.S. state pension plans returned a median annualized 5.9% over 10 years | Timberland Investment | Scoop.it

U.S. state pension plans returned a median annualized 5.9% for the 10 years ended June 30, 2016, vs. 6.8% for the 10 years ended June 30, 2015, said Cliffwater's most recent annual state pension performance report.

Large endowments with assets greater than $1 billion returned an average 5.7% over the 10 years ended June 30, making it Cliffwater's first report in which endowments did not outperform state pension plans. The average return for state plans was also 5.7%.
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The alternative investment consultant's report also looked at pension funds' asset allocations and performance by asset class.

As of June 30, 2016, the plans had an average asset allocation of 48% public equities (down two percentage points from 2015), 26% alternatives (up two percentage points), 24% fixed income (up one percentage point), and 2% cash (down one percentage point).

According to Cliffwater, most of the alternatives increase for the year was directed to private equity, private debt and opportunistic investments. Within alternatives, the average allocation as of June 30, 2016 was 36% private equity, 30% real estate, 18% hedge funds, 13% real asset and the remainder in other alternatives.

Looking at alternative performance, the median return for private equity was 9.9% for the 10 years ended June 30, and 5.8% for real estate. Individual pension funds' real estate returns varied the most of any asset class for the 10-year period, Cliffwater noted.
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Cliffwater's report also found that more than three-quarters of the pension funds exceeded the 4.9% average​ 10-year return for a passive portfolio of 65% stock index funds and 35% bond index funds. However, in aggregate, the plans underperformed the 8% assumed rate of return for the 10-year period.

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The Financial Performance of Real Assets Impact Investments

The Financial Performance of Real Assets Impact Investments | Timberland Investment | Scoop.it

The Global Impact Investing Network and Cambridge Associates present the first comprehensive analysis of the financial performance of private real assets impact investment funds.

The report analyzes the financial performance of 55 real assets impact investing funds of vintage years 1997 – 2014, grouped into three sectors: timber, real estate, and infrastructure. The report also marks the launch of three benchmarks of impact investing funds in these sectors, which Cambridge Associates will update quarterly (more funds will likely be added to the benchmark over time).

Real assets can play several roles in institutional portfolios, providing diversification, current income, the potential for strong, long-term returns, and an inflation hedge. In addition to these benefits, real assets impact investment funds can also help achieve important impact objectives. For example, many timber-focused impact funds in this study pursue sustainable timber production or land conservation; many real estate-focused impact funds focus on green real estate and/or affordable housing, and most infrastructure-focused impact funds target renewable energy generation.

 

This report continues the GIIN’s efforts to build a robust evidence base of financial performance data in various asset classes, following a benchmark of private equity and venture capital impact investing funds launched in 2015.

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Seven Lessons From A Decade Of Impact Investing

Seven Lessons From A Decade Of Impact Investing | Timberland Investment | Scoop.it

Almost all of us have, at some point, assembled an IKEA shelf or sofa, but have you ever wondered where the company gets the wood for those things?

It’s a big question, because 30 percent of the world’s greenhouse gasses come from the way we manage our forests, farms, and fields; and IKEA has pledged that each of the 16 million metric tons of pulp and timber it uses each year will either be made of recycled material or certified as being sustainably harvested. More importantly, the company is well on its way to achieving that goal by its target date of 2020, as its entry on the Forest Trends Supply Change portal shows.

If all big companies did this, we’d be well on our way to fixing the climate mess – but they don’t, so we aren’t, raising the question: how is IKEA getting the job done?

In part by purchasing entire forests across Romania, Bulgaria, and the Baltics so it can harvest timber slowly and carefully while restoring degraded areas, respecting wildlife, and giving all of us a chance to enjoy the occasional walk in the woods.

Despite all these public benefits, the purchase isn’t part of IKEA’s well-known philanthropic efforts. Instead, it’s part of the company’s business plan: IKEA expects to make money from its forests, but it explicitly wants to “do well by doing going good,” and that makes this an “impact investment”.

Impact investments worldwide total about $115 billion, according to the Global Impact Investing Network, and about $8 of that found its way into investments designed to support forests, farms, and fields over the past ten years, according to an Ecosystem Marketplace report called “State of Private Investment in Conservation 2016”.

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Modular builder Katerra plans mass-timber plant

Modular builder Katerra plans mass-timber plant | Timberland Investment | Scoop.it
Turnkey modular construction company Katerra has announced plans to open a mass-timber production facility in Spokane Valley, WA. Construction will begin this fall and production is expected to start in early 2018. The facility will generate 150 jobs.

The 250,000-square-foot plant will produce engineered wood products including cross-laminated timber (CLT) and glulam for floor and wall panels and structural beams. The company is working with Washington State University’s Composite Materials and Engineering Center to develop and test the products.

Products from the facility will be used on Katerra projects, including the hospitality center at Kootenai Health, in Coeur D’Alene, ID, which will combine Ronald McDonald House and Walden House temporary residences.
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How a small Wisconsin town is making some hedge funds very nervous

How a small Wisconsin town is making some hedge funds very nervous | Timberland Investment | Scoop.it

After a century-old paper mill in Brokaw, Wisconsin, closed a few years ago, the town of 250 residents effectively went bankrupt.

Brokaw will soon be dissolved by its two neighboring towns. But it has found a new way to live on: through a federal bill named for it that would restrict Wall Street's activist hedge-funds, the type of investing firms that were blamed for the town's demise.

 

The Brokaw Act would require more disclosures by these hedge funds, which have been accused of promoting short-term gains over the long-term health of the companies they battle for change. Its sponsor, Sen. Tammy Baldwin (D-Wis.), plans to reintroduce the bill when the Senate is back in session after earlier attempts last year stalled.
***
While activist investors were involved with the mill's parent company, their actual culpability for what happened in Brokaw is disputed.

 

It all started in 2011, when Starboard Value, the New York hedge fund led by Jeff Smith, took a stake in shares of Wausau Paper, the Mosinee, Wisconsin-based company that owned a slew of mills, including the one in Brokaw.

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By December of that year, Wausau's board of directors approved a plan to permanently close the Brokaw mill, eliminating 450 hourly and salaried jobs.

 

Those who defend the hedge funds say it was management at Wausau Paper, and not the investors, who were responsible for closing the mill. The same story had been happening all over during that time period as the American paper industry began facing greater competition from China and a more-environmentally-conscious consumer that was turning more frequently to computers and printing out fewer documents on paper.

 

Wausau Paper already had shut down a sulfite pulp mill in Brokaw in 2005, and two years later, closed its Groveton, New Hampshire mill, followed by the closure of one in Appleton, Wisconsin. In 2009, it closed its Livermore Falls, Maine, mill.
***
"Hedge-fund activists played essentially no role in the closure of the Brokaw mill," wrote Alon Brav of Duke University in a 2016 paper co-written with several other academics, who studied the case. "To the contrary, the paper company's incumbent management closed the mill — just the latest in a series of management's mill closures — amid an industry-wide decline that made the mill uneconomic to keep open."

 

But management believes the story of Brokaw would be much different had Starboard never taken a stake in Wausau Paper. Hank Newell was the chief executive of the paper company during much of Starboard's involvement.

 

Newell said that Wausau had a buyer lined up to acquire the Brokaw mill, but they balked after Starboard started publicly criticizing the company. A major customer as well as the company's lender also turned away amid the public battles with the hedge fund.

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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.”
***
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.
***
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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