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Timberland Investment
Timber Industry | Deals & Transactions | Investment Rationale | Financial Performance | Investors | Asset Managers
Curated by Sam Radcliffe
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Suzano Weighs Selling Land, Forestry to Cut Debt, CFO Says

Suzano Weighs Selling Land, Forestry to Cut Debt, CFO Says | Timberland Investment | Scoop.it
Suzano Papel & Celulose SA, Latin America’s most indebted pulpmaker, is considering the sale of farmland and forestry assets to reduce leverage, Chief Financial Officer Alberto Monteiro said.
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(via@FORSightResourc)

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Pennsylvania pension fund starts timber search

Pennsylvania pension fund starts timber search | Timberland Investment | Scoop.it

Pennsylvania Municipal Retirement System, Harrisburg, is searching for a timber manager to run $70 million, confirmed James Allen, secretary of the $1.6 billion pension fund.


State law requires that external manager services be put out to bid every five years. Current timber manager Forest Investment Associates' contract expires in March. The firm is invited to rebid.

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Commodities ETFs Narrow Their Focus

Commodities ETFs Narrow Their Focus | Timberland Investment | Scoop.it

Exchange-traded funds give investors an easy way to place bets covering a broad array of assets at once. But in the commodities sector, as with other asset classes, there are now funds dedicated to increasingly narrow market slices.

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Why do niche funds appeal to some investors?


They can give investors targeted exposures, while still providing diversification.


For instance, iShares S&P Global Timber & Forestry WOOD -0.73% holds shares in companies such as International Paper Co. and Packaging Corp. of America, as do other iShares commodities funds. But unlike those other funds, the timber ETF doesn't hold shares in oil companies or gold miners.

"We are attracted to the timber and forestry market because of the diversification benefits it provides," says Dennis Johnson, chief investment officer at Comerica Asset Management, which manages $25 billion and invests in the timber ETF, according to SEC filings. He says timber's value doesn't move in tandem with Comerica's other alternative investments, such as private equity and emerging-markets currencies.

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Scotiabank Declares Lumber Its Top Investment Pick For 2013

Scotiabank Declares Lumber Its Top Investment Pick For 2013 | Timberland Investment | Scoop.it
After four years of being the forgotten commodity, lumber is back in the spotlight, named Scotiabank's top pick for investors for the coming year.
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Forest Products Society journal publishes special biofuels issue

Forest Products Society journal publishes special biofuels issue | Timberland Investment | Scoop.it
A series of articles published as a special issue on biofuels by the Forest Products Journal highlights the relative impact of 15 different uses of biofuels on reducing CO2 emissions and increasing energy independence.
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Investing: Healing housing may lead economy back

Investing: Healing housing may lead economy back | Timberland Investment | Scoop.it

How can you invest in the housing resurgence? First, bear in mind that if you own a house, you probably have enough exposure to the housing market as it is. But if you think housing has a future, you could consider:


  • Lumber. The price of 1,000 board feet of framing timber is $356.50 on the CME futures exchange, up from $249.30 a year ago. Guggenheim Timber ETF (CUT) invests in timber stocks; it's up 17.9% this year.
  • Concrete. There's no concrete ETF, but Cemex (CX) is the world's largest cement producer. You'd better believe earnings will increase to buy the stock at its current price. But if U.S. construction does improve, earnings will soar, and the stock should do well.
  • REITs. Real estate investment trusts, or REITs, invest in commercial properties – apartments, offices, even storage units. REIT dividends are already taxed at ordinary income tax rates, so they should be somewhat immune from any fiscal cliff-related tax increases on dividends. The average equity REIT yields about 3.4%.


Any bet on a housing rebound depends on a rising economy, and currently, the economy is being held hostage by our elected officials. Should Congress resolve the fiscal cliff, however, the prospects of a housing rebound seem bright – and so do the prospects for the stocks that might prosper from that rebound.

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U.S. Timberlands: Who Owns Them And Where Are They?

U.S. Timberlands: Who Owns Them And Where Are They? | Timberland Investment | Scoop.it

The four Timber REITs own about 17 million acres of land in the U.S. These acres are at the core of the Timber REIT business. This sounds like a pretty big number. I thought it might be interesting to look at all of the timberlands in the U.S., see who owns them, and see where they are located.

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So, to summarize:

  1. 23% of the total acres in the U.S. are commercial timberland.
  2. Between 1% and 2% are owned by timber REITs or other publicly traded companies.
  3. The vast majority of private timberlands are owned by small landowners.
  4. The South and the Pacific Northwest account for about 57% of private timberland acres and 75% of harvest volume.
  5. Public ownership accounts for about 12% of timberland acres
  6. Public timberlands are, for all practical purposes, manages as parks rather than for timber production.
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Brookfield optimistic in latest report

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Key quote: We do not expect timberland values to be meaningfully positively impacted by improving timber prices as we believe most timberland buyers have been underwriting reasonable price recovery expectations into their discounted cash flow valuation models. However, increased certainty of achieving these prices and the prospect of significant increases in near-term cash yields are expected to increase investor enthusiasm in the timberlands asset class and attract additional capital, leading to upward pressure on timberland valuations

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Stimson sells 28K acres in Kootenai River valley into conservation easement

Stimson sells 28K acres in Kootenai River valley into conservation easement | Timberland Investment | Scoop.it
A conservation project on 28,000 acres of prime wildlife habitat in northwest Montana’s lower Kootenai River valley offers permanent access and protection to tracts of land with high conservation values, while continuing to support recreation...
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Cellulosic biofuel to surge in 2013 as first plants open

Cellulosic biofuel to surge in 2013 as first plants open | Timberland Investment | Scoop.it
Cellulosic biofuel companies will boost production almost 20-fold in 2013 as the first high-volume refineries go into operation, signaling a shift from an experimental fuel into a commercially viable industry.

Production of the fuel made from crop waste, wood chips, household trash and other non-food organic sources will reach 9.6 million gallons (36 million liters) in 2013, up from less than 500,000 gallons this year, according to data compiled by the U.S. Energy Information Administration and obtained by Bloomberg News.

That gain will leave the industry short of the government’s target for 1 billion gallons that gasoline and diesel producers are expected to blend into their products next year under a federal energy regulation. The industry may not meet those targets for another five years, and companies from Kior Inc. (KIOR) to Abengoa SA (ABG) are closing the gap.
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Harvard sells down Kaingaroa forest stake

Harvard sells down Kaingaroa forest stake | Timberland Investment | Scoop.it
Harvard Management Company, which manages Harvard University's US$30.7 billion endowment fund, has sold down its stake in the central North Island Kaingaroa forest.

Canada's public sector pension fund picking up the bulk and the New Zealand Superannuation Fund taking a small bite.

Canada's C$64.5 billion Public Sector Pension Investment Board will take a 30 percent stake in the 178,000 hectare forest, while the NZ Super Fund lifted its share 1.25 percentage points to 41.25 percent. Harvard Management will keep a 28.75 percent stake in the forestry company.

No price was disclosed, though the NZ Super Fund valued its 40 percent share at $954 million as at June 30, indicating Harvard's previous 60 percent stake was valued at about $1.43 billion.

The Super Fund was keen on lifting its stake in the forest and was looking at ways to buy out Harvard earlier this year, having acquired a minority stake in the timberlands for some $300 million.

Harvard Management natural resources portfolio, which accounts for about 13 percent of its assets, consists of timberland, agricultural land and other resource bearing properties. The asset class made a return of 2.4 percent in the year ended June 30, and has delivered an average annual return of 12.7 percent.
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Ohio Police & Fire Pension Fund raises timber allocation again

Ohio Police & Fire Pension Fund raises timber allocation again | Timberland Investment | Scoop.it
Ohio Police & Fire Pension Fund is adding a 5% allocation to master limited partnerships and decreasing its equity exposure as the result of an asset-liability study.
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Timber was raised to 5% from 3%, while global inflation-linked bonds increased to 13% from 12.9% and private markets increased to 8% from 7%.
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North American lumber prices forecast to soar in 2013 and reach record highs in 2014

North American lumber prices forecast to soar in 2013 and reach record highs in 2014 | Timberland Investment | Scoop.it
With the return of a demand-driven wood products market in 2012 – due to rapidly increasing housing starts in the U.S. – it is now forecast that lumber and panel prices will move to new highs in 2013 and record highs for lumber in 2014. A North American “super-cycle” has been predicted by WOOD MARKETS since 2008 as a result of emerging supply-side constraints (mainly on forests and logs) as well as changing demand dynamics, but the global financial crisis that started in late 2008 and an unusually slow U.S. housing market recovery have delayed this event until 2012. With the expectation of strong growth in U.S. housing starts over the next five years, combined with a better balance in the housing inventory and a recovering economy, the U.S. supply chain is expected to become overwhelmed at times during the next five years, allowing wood products prices to soar.
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New York buys Essex Chain of Lakes for $12.4 million

New York buys Essex Chain of Lakes for $12.4 million | Timberland Investment | Scoop.it

New York state taxpayers now own 18,294 additional acres of timberland that once largely comprised a working forest. 

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This sale is the first of several in queue, transferring former Finch, Pruyn and Co. property for preservation in the Adirondack Park.


The Essex Chain is roughly a third of the total 69,000 acres targeted for addition to the Forest Preserve in a deal announced by Gov. Andrew Cuomo last August. These are the last parcels of the 161,000-acre land transaction made by Finch, Pruyn to the Nature Conservancy in 2007.

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Pension Giant Welcomes Increased Alternatives Oversight

Pension Giant Welcomes Increased Alternatives Oversight | Timberland Investment | Scoop.it

One of the most sophisticated pension fund investors in Europe has welcomed its national regulator's calls for improved supervision and oversight on allocations to alternative assets.

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The FSA sent a "Christmas Letter" to these investors asking them to examine how and with what frequency they evaluate alternative investments, taking into account the risk/return benefits and their own sensitivity to the allocation. The regulator said that due to the low yield environment, increasing numbers of institutional investors were turning to alternatives for higher returns and for this reason it wanted to ensure they understood the complexities involved


ATP's alternatives head, Ulrik Dan Weuder, said: "The regulator wants pension funds to better explain how they evaluate these investments - and how they monitor them. It is a positive step as investing in alternatives is a complex business. Although the fund manager (if one does not invest directly) makes many of the decisions, the end investor should be able to answer detailed questions on the investments (strategy behind the investment, investment risk, revenue drivers etc.), if they cannot, they should not be investing there."


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ATP owns about 170,000 acres of timberland in New York and Wisconsin.

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First TIMO IFM Project Registered for CA Carbon Market

First TIMO IFM Project Registered for CA Carbon Market | Timberland Investment | Scoop.it

Finite Carbon, the forest carbon development company that provides a single-source solution for creating and monetizing carbon offsets, successfully developed and registered the Champion Forest Carbon Project on behalf of The Forestland Group (TFG) on December 28, 2012.


Located on 102,899 acres in New York’s Adirondack Mountains, the Champion project is the first improved forest management (IFM) project completed for a timber investment management organization (TIMO) and the largest project to date for California’s forthcoming greenhouse gas emissions trading program. By partnering with Finite Carbon, TFG will realize a new source of revenue from its sustainably managed forestlands.

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UPDATE: West Fraser Timber Down 2% Amid Reports Lumber Prices May Tumble

UPDATE: West Fraser Timber Down 2% Amid Reports Lumber Prices May Tumble | Timberland Investment | Scoop.it

West Fraser Timber Co Ltd (WFT.TO) may be a stock to watch as Bloomberg cites Forest Economic Advisors LLC as saying that lumber futures may tumble as much as 25% from a seven-year high as output increases in Canada, the world's biggest exporter. WFT rose in the early minutes of today's session to as high as $71.90 but it soon turned negative and is now down more than 2%.


The price may touch US$300 per 1,000 board feet in 2013, Paul F. Jannke, a principal at the consulting company, said in a telephone interview on Dec. 27. In mid-October, he correctly forecast the rally. Futures on the Chicago Mercantile Exchange on Dec. 26 reached $399.50, the highest since April 2005.

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Jack D Bridges's curator insight, January 1, 2013 11:19 AM

Ah, a good stub of an article to read (leave aside the WFT.TO news), because it talks about timber market price dynamics. FEA may be right about lumber futures--we've seen a huge rally in most N.American wood baskets due to forecasts of a continued rebound in domestic housing construction/demand. 

 

Yes, timber harvests across Canada may indeed ramp-up and help push down lumber pricing...but how much of Canada's harvest is shipped to China/Japan/Korea? If US housing starts stay steady, and we see a rebound in single family home new construction (which uses 3x as much wood as multi-fam), a big surge in supply should be balanced by the amount exported to Asia, and the return to normalized home construction in N. America. This scenario relies on continued economic growth in Asia (say, China at a self-proclaimed 7% GDP growth, and Japan muddling through their 25+ year deflation puzzle), but I don't think it's overly optimistic.  Sure, lumber prices are vulnerable after a massive (speculative) rally, but as long as other input costs stay under control (crude under $100 barrel would be nice), I wouldn't expect anything but a reversion to the mean. Tumble? Makes for a good headline, but not much else. 

JDB

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New chapter for NewPage Corp.

New chapter for NewPage Corp. | Timberland Investment | Scoop.it
The longest-running and highest-profile restructuring saga in the Wisconsin paper industry reached a new milestone as NewPage Corp. emerged from Chapter 11 bankruptcy protection.
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Sell Yosemite, Hold a Smithsonian Yard Sale

Sell Yosemite, Hold a Smithsonian Yard Sale | Timberland Investment | Scoop.it
In The Wall Street Journal, Terry Anderson and Bruce Johnsen write that the federal government could sell assets to help cover the deficit. The Bureau of Land Management holds 253 million acres—at $2,000 per acre .
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IndexIQ’s IQ Global Resources ETF (GRES) Receives 5-Star Overall Morningstar Rating

IndexIQ’s IQ Global Resources ETF (GRES) Receives 5-Star Overall Morningstar Rating | Timberland Investment | Scoop.it

The IndexIQ Global Resources ETF (NYSEARCA:GRES), the first global resources hedged Exchange-Traded Fund, has received a 5-Star Overall Morningstar RatingTM and a 5-Star Three-Year Morningstar RatingTM as of November 30, 2012 out of 22 funds in the Natural Resources category, it was announced today.


“The last three years have seen tremendous growth in demand for commodities worldwide”


Introduced on October 27, 2009, GRES is the broadest commodities and natural resources ETF, including: livestock; precious metals; grains, food and fiber; energy; industrial metals; plus timber, water, and coal. It is based on an index with over five years of live history, designed to reweight its allocations to individual commodity sectors monthly. The fund is diversified both geographically and by sector. We believe GRES offers a unique and market proven methodology and has been among the highest performing ETFs in the commodities and natural resources category during its more than three years of live history, as well as exhibiting among the lowest levels of volatility in its category.

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Lyme sells easement on 21,000 acres in Washington County, Maine

Lyme sells easement on 21,000 acres in Washington County, Maine | Timberland Investment | Scoop.it

The land, 21,870 acres in and adjacent to the plantation of Grand Lake Stream, is east of West Grand Lake and northwest of Big Lake. It is the “ last big piece” of a decade-long effort by local and state officials, and by Downeast Lakes Land Trust, to protect more than 350,000 acres of undeveloped woods enveloping the lakes of northern Washington County, according to Mark Berry executive director of the land trust.


The land, owned by Lyme Timber Co. of Hanover, N.H., abuts 33,708 acres already owned by the land trust and includes 17 miles of shoreline on West Grand, Big and Lower Oxbrook lakes. It includes frontage on Big Musquash Stream and conserves a quarter-mile section of the west side of Grand Lake Stream above Big Falls, according to a prepared statement about the completed easement.

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Berry said the land trust has a three-year option to buy the land outright from Lyme Timber Co.

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Rayonier acquires 62,000 Texas acres

Rayonier acquires 62,000 Texas acres | Timberland Investment | Scoop.it
Rayonier (NYSE:RYN) today announced it has acquired approximately 62,600 acres of timberlands in East Texas. The property, purchased from a private ownership group for $88 million, or $1,406 per acre, brings the company’s total ownership in Texas to over 150,000 acres.

“These timberlands, located in one of the most competitive wood baskets in the Gulf States, significantly increase Rayonier’s landholdings in Texas and enable us to better support our existing paper, pulp and solid wood customers,” said Paul G. Boynton, chairman, president and chief executive officer. “With the majority of this property located within 60 miles of the Houston metropolitan area, it also provides tremendous value creation potential for our higher-and-better-use land sales program.”

The timberlands are located principally in Liberty, Polk and Trinity counties. Rayonier owns, leases or manages approximately 2.7 million acres in 10 states in the U.S. and New Zealand.
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Jack D Bridges's curator insight, December 19, 2012 8:58 AM

I don't know who sold, but $1,400K/acre for a decent sized transaction seems a good price (without knowing the specie mix, stocking levels, and age-class of the timber)--especially with the apparent HBU value add to the land (60 miles from Houston metro). Deal flow looks steady into 2013...

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Timberland REIT takes axe to share price

Timberland REIT takes axe to share price | Timberland Investment | Scoop.it
The board of directors of Wells Timberland REIT Inc. on Friday issued an estimated value of $6.56 per share of common stock in the real estate investment trust, which invests in working timberland. The shares were offered to the public at $10 when the REIT was launched in 2006.

The company blamed the 35% drop in value on the still-dismal housing industry but said that the REIT's land holdings are continuing to grow in value.

“While the estimated per-share value of Wells Timberland REIT has been adversely affected by the economic downturn, our strategic forestry management practices have permitted us not only to maintain but also increase the percentage of higher-value timberland,” the company said in a written statement.
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Timber value jumps, still drops to No. 3

Timber value jumps, still drops to No. 3 | Timberland Investment | Scoop.it
An 8 percent increase in a billion-dollar industry is significant, but timber still fell from its long-held second place spot on Mississippi’s agricultural commodity list.
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