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Timberland Investment
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REIT goes shopping for farmland

REIT goes shopping for farmland | Timberland Investment | Scoop.it

An investment firm wants to buy farmland on the West Coast and elsewhere with more than $50 million raised through the initial public offering of its stock.


The Gladstone Land Corp., based in McLean, Va., is launching a real estate investment trust for farmland, a concept that has previously been applied to commercial buildings and timber properties.

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The firm's "sweet spot" for acquisitions will be parcels in the $8 million-$10 million range, Gladstone said. A secondary stock offering is likely to raise funds for further takeovers after the IPO money is spent.


The company is also looking to hire more employees to oversee purchases in California, Oregon and Washington, he said. It's also looking at parcels in Georgia, New Jersey, Michigan and North Carolina.

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The company plans to buy land and then lease it back to farmers who want cash but don't want to take out mortgages, he said. It will pursue such deals with large independent growers and "corporate farms" that already have access to national produce distribution channels.


Most leases will have to be renewed every two to five years, which makes some investors nervous but allows for quicker increases in rents, Gladstone said.

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Ontario Teachers' Pension Plan gets 13 percent overall return rate in 2012, 3.4 percent for timber

Ontario Teachers' Pension Plan gets 13 percent overall return rate in 2012, 3.4 percent for timber | Timberland Investment | Scoop.it

The Ontario Teachers' Pension Plan, one of Canada's top investors, said on Tuesday it had a 13.0 percent rate of return on its investments in 2012, bringing net assets to a record high of C$129.5 billion ($127.4 billion).

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The real estate portfolio, managed by Teachers' Cadillac Fairview unit, was C$16.9 billion at year end and returned 19.4 percent. The infrastructure portfolio was C$9.6 billion and returned 8.4 percent. Timber land assets were C$2.2 billion, with a return of 3.4 percent.

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Environmental Group Fights Delay In Marbled Murrelet Habitat Protections

Environmental Group Fights Delay In Marbled Murrelet Habitat Protections | Timberland Investment | Scoop.it

An environmental group has stopped an agreement between the timber industry and federal wildlife officials that would have delayed  new protections for a threatened seabird.


The U.S. Fish and Wildlife Service settled with the timber industry group, the American Forest Resource Council, last summer, to avoid a legal battle over for the marbled murrelet.


The industry group argued that maps of protected areas called "critical habitat" had been done improperly.


Fish and Wildlife agreed to suspend the current maps ­ but draft new ones. But, that agreement, and the protracted timeline ­ that it would take five years ­ drew a legal challenge from the Center for Biological Diversity.

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Federal scientists argued since other protections are in place, removing critical habitat wouldn't harm the murrelet.


The judge disagreed and blocked the deal.


A timber industry spokeswoman intends to reach a new agreement, noting that the judge appeared open to a settlement if it comes with "some modification."

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Playing Stocks a Bit Like Jeremy Grantham

Playing Stocks a Bit Like Jeremy Grantham | Timberland Investment | Scoop.it

With signs of fatigue in U.S. stock markets and ongoing unrest in Europe, some portfolio managers are taking a Jeremy Grantham-like approach to investing.

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In recent years, Mr. Grantham has been advising investors to remain wary of high valuations for lower-quality U.S. stocks and most types of bonds. Two areas he has been more positive about--timber and high-quality dividend-paying stocks--are also asset classes favored by Picket Fence's Mr. Kinder. In client portfolios, he is adding to positions in the iShares S&P Global Timber & Forestry ETF (WOOD) and the Guggenheim Timber ETF  (CUT).


"There's a strong diversification benefit to including timber ETFs into the mix," Mr. Kinder says. "Although it wouldn't be surprising to see a short-term pullback in lumber prices, the fact that Grantham sees longer-term value adds to our conviction about that asset class."

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Jack D Bridges's curator insight, April 2, 2013 8:50 AM

Yes, rolling out of anything correlated to equities and into timberland is a good idea....but, rolling into ETFs comprised of timber REITs is hardly the best way (they're highly S&P correlated, most are not true timber plays, they're levered, etc.).

 

The preferable manuever (at least how I see it) is to allocate into timberland through PE--you get better global diversifacation, less leverage, and usually far better managers. The loss of liquidity is about the only trade-off, and right now liquidity is far more expensive than investors realize. 

 

For investors without access to PE (with suitably long holding periods) I've been basically selling the S&P, and buying KEWL. After recovering so much value lost during the 2008 crash, this is a great point to lower volatility, reduce risk, and move into sustainably managed timber. 

 

 

Jeffrey Wikle's comment, April 4, 2013 9:13 AM
Could you explain what PE and KEWL are for we constituents?
Jack D Bridges's comment, April 4, 2013 9:25 AM
Sure, Jeffrey--my apologies for the confusion. PE is the acronym for private equity; KEWL is the ticker symbol for the shares of The Keweenaw Land Association, a company my family has invested in for 30+ years (www.keweenaw.com). Once again, sorry for not being clearer, and thanks for writing.
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Judge Halts Timber Sale East Of Eugene

Judge Halts Timber Sale East Of Eugene | Timberland Investment | Scoop.it

A federal judge has blocked a proposed logging project on the Willamette National Forest, saying the government must first do an environmental impact statement, or EIS.


Conservation groups Oregon Wild and Cascadia Wildlands challenged the 2,100 acre Goose Project in Eugene Federal Court.

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Residents collected nearly 5,000 signatures opposing the Goose Timber Sale. Heiken says if the Forest Service focuses on thinning younger stands, they won't meet as much opposition.

"They chose to log in mature forests that are habitat for spotted owls and near streams and in potential wilderness areas," Heiken says. "And if they could decide not to do those things that would help a lot. So the EIS gives them a chance to get it right this time."

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Lumber markets improved sharply in the US during 2012 and early 2013; production was up eight percent and prices have increased over 60 percent since late 2011, reports the Wood Resource Quarterly

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Shell to buy 500,000 California forest carbon credits

Shell to buy 500,000 California forest carbon credits | Timberland Investment | Scoop.it
Shell Energy has agreed to buy 500,000 carbon offsets sourced from a forestry project in Michigan as soon as regulators approve the credits for use in California's cap-and-trade program.

The credits come from a project by carbon offset developers Blue Source to improve forest management in a swatch of land in Michigan's upper peninsula.

"The transaction represents a significant step in carbon market development since actions from large compliance entities like Shell are necessary to help spur investment in greenhouse gas reduction projects," Blue Source said in a press release.

Blue Source, which also brokered the deal, said it would not disclose how much Shell agreed to pay for the credits.

The Bishop property where the project resides consists of over 200,000 acres of land, making it one of the largest offset projects in development that can generate credits eligible for California's carbon market.

Sam Radcliffe's insight:

The Bishop property is owned by a fund managed by The Forestland Group.

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Pennsylvania Municipal considering core real estate, timber manager searches; re-hires FIA

Pennsylvania Municipal considering core real estate, timber manager searches; re-hires FIA | Timberland Investment | Scoop.it

Pennsylvania Municipal Retirement System, Harrisburg increased its overall target allocation to real estate and might search for core real estate or timber managers later this year.

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Separately, the pension fund rehired timber manager Forest Investment Associates to run about $80 million. An RFP was issued in January to comply with state law that external manager services be put out to bid every five years. There were no other finalists.

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Hancock sells development rights to 43,000 acres in Washington

Hancock sells development rights to 43,000 acres in Washington | Timberland Investment | Scoop.it

King County, reaching one of the biggest deals of its kind, has agreed to buy development rights on a 43,000-acre forest stretching from Enumclaw to Greenwater along the White River.


County Executive Dow Constantine announced the $11.1 million deal with Hancock Timber Resources Group at a news conference Thursday, saying it will expand the county’s “green wall against sprawl.”


The deal, approved Thursday by the Hancock board of directors, is subject to approval by the Metropolitan King County Council. Councilmembers Larry Phillips and Reagan Dunn, chair and vice chair respectively of the council’s Transportation, Economy and Environment Committee, declared their support for the agreement.


Constantine said the forest is the largest block of privately owned land in the county that isn’t already protected from development. It would continue to be operated as a working forest, with the public allowed to use the land for recreation.


The biggest deal of this type was King County’s 2004 purchase of development rights on Hancock’s 89,000-acre Snoqualmie tree farm.

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Sam Radcliffe's comment, March 21, 2013 6:18 PM
Let me do the arithmetic for you: that's $258 per acre
Jack D Bridges's curator insight, March 22, 2013 9:03 AM

$258/an acre seems like a great deal for King County--though, I haven't seen the terms of the transaction (for some reason the writer avoided calling it an easement).

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High court rules for timber industry over road runoff

High court rules for timber industry over road runoff | Timberland Investment | Scoop.it

The U.S. Supreme Court on Wednesday endorsed the U.S. Environmental Protection Agency's long-standing decision not to require Clean Water Act permits for stormwater that runs off logging roads.

The nine-member court ruled on a 7-1 vote, with Justice Stephen Breyer recused, that the EPA's conclusion was a reasonable interpretation of the law.


The dispute - centering on two cases that the court consolidated - has attracted intense interest from the timber industry, which is keen to be exempt from Clean Water Act permitting. A total of 31 state attorneys general weighed in to support Oregon, which also opposes permitting.

The case arose when the environmental group, the Northwest Environmental Defense Center, challenged EPA's interpretation of the law as it applied to two roads in the Tillamook State Forest in Oregon by suing logging road operators in federal court.


In Wednesday's opinion, Justice Anthony Kennedy, writing for the majority, said that it was reasonable for EPA to conclude that runoff from logging roads did not fit within the definition in the Clean Water Act and associated regulations of the term "industrial activity."


Kennedy also noted that states already regulate logging roads, meaning the EPA "could reasonably have concluded that further regulation in this area would be duplicative or counterproductive."


Justice Antonin Scalia wrote a dissenting opinion in which he disagreed with the majority's view that the EPA interpretation of the law was reasonable.

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New Zealand Forestry Investment Outlook Remains Bright on China Demand

New Zealand Forestry Investment Outlook Remains Bright on China Demand | Timberland Investment | Scoop.it

The economy of New Zealand grew at the fastest pace in three years in the last quarter of 2012, with demand for forestry exports underpinning gains in the primary sector, the National Business Review reported on 21 March 2013. In addition, gains in the forestry sector helped offset declines in other areas such as manufacturing. The outlook for New Zealand’s forestry sector remains positive mostly due to demand from China, which is likely to provide support for New Zealand forestry investment.

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International Day of Forests

International Day of Forests | Timberland Investment | Scoop.it

The United Nations General Assembly has proclaimed 21 March the International Day of Forests. The Day will celebrate and raise awareness of the importance of all types of forests. On each International Day of Forests, countries are encouraged to undertake local, national and international efforts to organize activities involving forests and trees, such as tree planting campaigns.

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Ontario experiencing delays in shipping forest products to United States

Ontario experiencing delays in shipping forest products to United States | Timberland Investment | Scoop.it

Current delays in shipping forest products to the United States are being experienced by Ontario forestry companies and The Ontario Forest Industries Association (OFIA) is expressing significant concern on the matter.


The delays are a direct result of a major lack of rail cars being provided by key railway carriers. The inability of Ontario companies to ship their products across the United States border is causing substantial losses in market share, something that OFIA believes could have long lasting impacts for Ontario’s forest sector.


“With the return of markets in the United States, we are seeing a corresponding increase in the demand for Ontario forest products. Unfortunately, we believe that Canadian Class 1 railroads have clearly underestimated both the magnitude of the recovery and the number of rail cars needed to ensure that Ontario products make it to market” says Jamie Lim, President and CEO of OFIA.

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Acadian Timber Shares Cross 6% Yield Mark

Acadian Timber Shares Cross 6% Yield Mark | Timberland Investment | Scoop.it

In trading on Thursday, shares of Acadian Timber Corp. (Toronto: ADN) were yielding above the 6% mark based on its quarterly dividend (annualized to $0.825), with the stock changing hands as low as $13.70 on the day. Dividends are particularly important for investors to consider, because historically speaking dividends have provided a considerable share of the stock market’s total return.


In general, dividend amounts are not always predictable and tend to follow the ups and downs of profitability at each company. In the case of Acadian Timber Corp., looking at the history chart for ADN below can help in judging whether the most recent dividend is likely to continue, and in turn whether it is a reasonable expectation to expect a 6% annual yield.

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FIRPTA proposals 'important step' for US real estate

FIRPTA proposals 'important step' for US real estate | Timberland Investment | Scoop.it

The Association of Foreign Investors in Real Estate (AFIRE) has welcomed proposals to changes tax laws affecting foreign property investors.


The White House has proposed changes to the Foreign Investment in Real Property Tax Act of 1980 (FIRPTA), as part of a broader infrastructure package unveiled by President Barack Obama. The proposals, known as the Rebuild America Partnership, are designed to spearhead significant new investment in US infrastructure.

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FIRPTA has long been seen as an obstacle to foreign investment in US real estate. Under the legislation, foreign firms that dispose of US real property are obligated to pay US tax on any gains realised. This is not the case for other types of US investments.


As a White House proposal pointed out, "Foreign investors, including large foreign pension funds, regularly cite FIRPTA as an impediment to their investment in US infrastructure and real estate assets".

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Beyond pulp and paper - there is new hope in Thunder Bay

Beyond pulp and paper - there is new hope in Thunder Bay | Timberland Investment | Scoop.it

In a land of such seemingly endless forest resources, it's hard to imagine that the forest industry of Northwestern Ontario, Canada would be a shadow of its former self in just a decade. Since the start of the millennium the majority of pulp and paper mills and sawmills strung out along the Trans-Canada Highway from Sault St. Marie to Kenora have been shuttered by economic forces. These include unfavorable currency exchange rates, low cost competition, the sharp decline of newsprint demand and the fall of the US housing market. Fifty percent of Ontario's major forest industry capacity was lost during this period.


But there is some hope of recovery germinating in Thunder Bay, the once mighty pulp and paper town, and the entire Northwest Ontario region. The Centre for Research and Innovation in the Bio-Economy (CRIBE) has been selectively investing seed money from the Government of Ontario to revitalize the industry.


Established in 2009, CRIBE has a five-year mandate to invest up to $25 million Canadian to assist pulp and paper companies to find new and innovative valued-added revenue streams from forest resources. This is being done by collaborating with research and development organizations, Northern Ontario universities and technology companies outside the pulp and paper industry involved in such diverse fields as automotive parts manufacture, bio-plastics, bio-fuels, food additives, pharmaceuticals and industrial ethanol. As a result, forest products research and development work previously done in laboratories is now being applied in demonstration projects using wood fiber, formerly underutilized woody materials and pulp process by-products from real-world processes.

Sam Radcliffe's insight:

Thanks for the link @FORSightResourc

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Timber Prices to Surge Following Beetle Epidemic: Campbell Group Report

Timber Prices to Surge Following Beetle Epidemic: Campbell Group Report | Timberland Investment | Scoop.it

A supply shock associated with the epidemic of mountain pine beetles is one of three factors which will drive a surge in timber prices throughout Canada and the United States in 2013 and beyond, a new report predicts.


In its latest edition of Timber Trends, The Campbell Group LLC described 2013 as the “beginning of a long term bullish trend for the timber industry.”

While this is welcome news for timber manufacturers and investors, it is not so good for builders in Canada as it will add to material costs at a time of an anticipated slowdown in housing construction.


“Do you remember when you were a kid and your parents told you that money didn’t grow on trees?” forest economist and report author Bruce P. Glass asked, referring to the prospects of forestry as an asset for investment.


“Unfortunately for you, what your parents told you was only partially true. Sure, dollar bills don’t grow on trees. But the trees themselves are worth big bucks.”


The report quotes Grantham Mayo van Otterloo (GMO) chief investment strategist Jeremy Grantham as saying that timber prices would rise by as much as 6.5 per cent over seven years.


Glass says prices could go even higher, and that three factors lie behind these expectations:

  • First and foremost is the mountain pine beetle bug epidemic...
  • Combined with an increase in demand from China...
  • Add that to demand pressures associated with a likely recovery in US housing construction...
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ENC Team 6's curator insight, November 7, 2013 9:57 AM

 A "supply shock" is an event that directly affects firms’ costs of production and thus the prices they charge; it shifts the economy’s aggregate-supply curve and, as a result, the Phillips curve. For example, when an oil price increase raises the cost of producing gasoline, heating oil, tires, and many other products, it reduces the quantity of goods and services supplied at any given price level. 

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Auditor general delivers damning report on B.C.'s carbon trading system, Crown corporation that managed funds

Auditor general delivers damning report on B.C.'s carbon trading system, Crown corporation that managed funds | Timberland Investment | Scoop.it

B.C. auditor general John Doyle delivered a damning report Wednesday on the province’s controversial carbon trading system and the Crown corporation Pacific Carbon Trust.


The report concludes the government did not reach its goal of carbon neutrality in 2010, the year under examination, because the carbon offsets it purchased that year were not credible.


The B.C. government and the Pacific Carbon Trust immediately rejected the audit’s conclusions, saying the report is not valid because the auditor general’s office is not an accredited expert in carbon offsets.


Carbon industry players had made the same argument in a barrage of letters to the auditor general and B.C. attorney general’s office before the audit’s release.

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Lumber sector enters ‘super cycle’ as U.S. housing recovery gains steam

Lumber sector enters ‘super cycle’ as U.S. housing recovery gains steam | Timberland Investment | Scoop.it

Lumber and forest-product stocks have been on a huge tear over the past year as the U.S. housing market recovers, but there is still more room for prices to rise thanks to the emergence of a “super cycle” in the underlying commodity, say analysts.


“Although it is a cyclical area and we have seen forestry stocks appreciate greatly in the past 12 months due to the recovery in the U.S. housing market, demand is greater than supply, which should push areas of the sector higher,” said Arthur Salzer, chief executive at Northland Wealth Management Inc. in Markham, Ont.


The recent rise in lumber and forest-product equities is due to an equally significant run in lumber and oriented strand board (OSB or particle board) prices over the same period.


Lumber prices have climbed 45% to US$408 per thousand board feet from US$282 in mid-March last year. OSB prices, meanwhile, have doubled to US$430 per one thousand square feet from US$215.

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2013 US Timberland Ownership: Descriptive Statistics

2013 US Timberland Ownership: Descriptive Statistics | Timberland Investment | Scoop.it

According to Forisk tracking of timberland ownership in the United States, 117 firms currently own or manage in excess of 100,000 acres of timberland. These firms feature the following descriptive statistics:

  • As a group, they own/manage 86.2 million acres of timberland.
  • On average, they own/manage 736,589 acres of timberland.
  • The median ownership is 312,000 acres.

Assuming an average per acre value of $1,500, each firm owns or manages on average $1.1 billion in timberland assets.

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Jeffrey Wikle's comment, April 4, 2013 9:20 AM
I think there is some overlap for AFM, which manages a lot of FIA timberland. AFM is a forestry consultant. All the rest on the list, perhaps with the exception of Wagner, are purely TIMOs or REITs.
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Canadian timber groups are investing in enlarging capacity again

Canadian timber groups are investing in enlarging capacity again | Timberland Investment | Scoop.it

The unexpectedly brisk recovery in the US building industry and increasing exports of softwood lumber to China and Japan are currently putting many Canadian and US timber groups in an optimistic frame of mind. Producers are working from the assumption that the upward trend already observed in softwood lumber sales, production, and prices for a number of months now is going to continue this year. A variety of Canadian companies in particular have responded to the last few months of growing demand for softwood lumber assortments and the marked recovery in the level of prices, especially in the USA, by drawing up plans for capacity enlargement in the softwood lumber sector. The decisions range from reopening temporarily idled works and investment in expansion to setting up new production lines. The measures announced to date in Canada alone indicate that the output of softwood lumber could rise by several million cubic metres in 2013 and 2014.

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The Next 100 Years of Forests in the U.S. - Growing the Forests We Want and Need

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