Timberland Investment
96.9K views | +9 today
Follow
Timberland Investment
Timber Industry | Deals & Transactions | Investment Rationale | Financial Performance | Investors | Asset Managers
Curated by Sam Radcliffe
Your new post is loading...
Your new post is loading...
Scooped by Sam Radcliffe
Scoop.it!

The Harvard Yard Sale: Private Equity, Real Estate and New Zealand Dairy Farms

The Harvard Yard Sale: Private Equity, Real Estate and New Zealand Dairy Farms | Timberland Investment | Scoop.it

Harvard University spent years assembling 8,500 acres of dairy farms and roughly 5,500 cows on the South Island of New Zealand. Now it’s selling.

 

Private-equity giant KKR is nearing a deal to buy those holdings from Harvard for more than $70 million pending regulatory approval, said people familiar with the matter. The sale would mark an end to one of the most distinctive bets by the world’s richest endowment.

 

Harvard is an anomaly among endowments, holding a $4 billion natural resources portfolio that directly owns assets across five continents. The $36 billion endowment owns California vineyards, Chilean timberland and Brazilian soybean and maize farms. Its natural resources bets helped the endowment profit for more than a decade.

 

But it is reworking that portfolio under a new head of natural resources after Harvard wrote down its value by more than 10% last year, its biggest loss since its 1997 inception.
***
Quickly scaling up or down Harvard’s illiquid natural resources holdings is more difficult. Harvard isn’t planning to sell its entire natural resources portfolio and could even buy new assets, a person close to the endowment said, but will exit investments opportunistically.

 

Harvard was once the envy of the endowment world, in part for its lucrative bets on farms and forests. Most other endowments invest in farmland and timber by parking money in funds. But Harvard in the 1990s began amassing direct investments in natural resources, eventually scouring the globe to buy assets directly and find local operators to care for its cows, trim trees and find buyers for the resulting commodities.

 

Over the decade ending 2014, the natural-resources portfolio gained an average annualized 11.6%, above the comparable return of the whole endowment. Harvard hasn’t published a more recent 10-year figure.
***
Harvard first ventured into natural resources in 1997, buying a hardwood forest in the Appalachian region. Harvard snagged discounts on forestland by buying in size, believing that riding out timber-price slumps would help yield profits.

 

Harvard started moving away from U.S. timber in 2003, a person familiar with the matter said, a call that proved prescient when the U.S. housing market collapsed. Led by New Zealand native Andrew Wiltshire, the natural resources group diversified by going abroad and into farmland. Many deals bet on increasing consumption in the developing world, particularly China.

more...
No comment yet.
Scooped by Sam Radcliffe
Scoop.it!

Harvard Said to Seek Sale of Slumping Natural Resources Assets

Harvard Said to Seek Sale of Slumping Natural Resources Assets | Timberland Investment | Scoop.it
Harvard University, the world’s richest school with a $35.7 billion endowment, is seeking to sell natural resources assets after the portfolio lost money last year, two people with knowledge of the matter said.
The university is looking to restructure the $4 billion of holdings to free up cash for other investments, according to one of the people, who declined to be named because the information is private. The portfolio, once considered a crown jewel in the endowment, is vast with assets including timberland plantations in Central and South America, a dairy farm in New Zealand, and vineyards in California.
Harvard Management Co., the arm of the university overseeing the endowment, confirmed plans to make changes, saying steps have been taken to improve performance including recently hiring a new managing director to oversee the portfolio.
“The team is focused on refining HMC’s natural resources strategy and streamlining assets that are concentrated across certain asset classes and geography,” Emily Guadagnoli, a spokeswoman, said in a statement.
Overhauling the portfolio would represent a significant turn and could signal attempts to simplify the endowment under a new leader who takes over next month. Harvard was viewed as a prescient investor in the late 1990s when it bought direct stakes in vast swaths of timberland in the U.S., later selling the land while diversifying into vineyards, farms and forests around the world.
more...
No comment yet.
Scooped by Sam Radcliffe
Scoop.it!

Harvard hires natural resources managing director

Harvard hires natural resources managing director | Timberland Investment | Scoop.it

Colin Butterfield was named managing director, head of natural resources at Harvard Management Co., the investment management arm of Harvard University, said spokesman Lex Suvanto in an e-mail.

Mr. Butterfield, who starts in early October, will lead the natural resources investment team and enhance manager relationships, said an HMC news release. He will report to Rene Canezin, managing director, head of public markets. Mr. Canezin has been filling in as interim head of natural resources.

Previously, Mr. Butterfield was CEO of Radar Propriedades Agricolas SA, a $2.2 billion joint venture between TIAA-CREF and Cosan SA focused on Brazilian farmland investing. A search is being conducted for Mr. Butterfield’s replacement, said TIAA spokesman Stewart Lewack in an e-mail.

HMC manages the Cambridge, Mass.-based university’s $37.6 billion endowment and related financial assets. The endowment’s target range for natural resources and commodities is between 6% and 16% of the total portfolio.

more...
No comment yet.
Scooped by Sam Radcliffe
Scoop.it!

Wiltshire Will Leave Harvard Management Company

Wiltshire Will Leave Harvard Management Company | Timberland Investment | Scoop.it
Longtime Harvard Management Company investor Andrew G. Wiltshire will retire from his position as alternative assets manager later this year.

Wiltshire joined HMC—the University’s investment arm that oversees its $35.9 billion endowment—in 2001 as a natural resource specialist. During his time at HMC, he grew Harvard’s natural resources investment portfolio, which delivered an annual return of 11.6 percent over the 10-year period from June 30, 2004 to June 30, 2014, according to the press release.

Wiltshire spearheaded HMC’s timberland investment strategy, which began in 1997 and expanded greatly under the guidance of former President and CEO Jane L. Mendillo. Harvard’s timber investments, though, fell into controversy after a former contractor for Harvard’s 33,00-acre plot of forest in Romania was arrested on bribery and money laundering charges in January 2014. Soon after, Harvard put the Romanian timberland up for sale, and it was acquired by Ikea Group this summer.
more...
No comment yet.
Scooped by Sam Radcliffe
Scoop.it!

Kaingaroa Forest has new majority shareholder

Kaingaroa Forest has new majority shareholder | Timberland Investment | Scoop.it
CANADA’S Public Sector Pension Investment Board (PSP Investments) is now the majority shareholder of the assets of Kaingaroa Timberlands. The board is one of Canada’s largest pension investment managers, with over CAD 93 billion of assets under management at 31 March 2014. Their mandate is to invest funds for the pension plans of the Canadian Public Service, the Canadian Forces, the Royal Canadian Mounted Police and the Reserve Force.

The investment board completed the purchase of the remainder of the share parcel in Kaingaroa Timberlands from Harvard Management Company in late November. PSP Investments now owns 58,75 percent of the assets with the New Zealand Superannuation Fund holding 38,75 percent and Kokano Investment Partnership owning 2.5 percent.

The 189,000 hectare Kaingaroa Forest on the Volcanic Plateau of New Zealand’s central North Island makes up the bulk of Kaingaroa Timberlands’ assets. Other assets include a log processing plant at Kaingaroa, a log yard at Murupara and a nursery at Te Ngae, Rotorua.

No details were available on the purchase price. However in 2012 the NZ Super Fund valued its (then) 40 percent share at $954 million. In 2004 Harvard beat China's Citic ((China International Trust and Investment Corporation) to buy the Kaingaroa assets and cutting rights from receivership in 2004. No price was disclosed at the time but it was estimated to be over USD 600 million.
more...
No comment yet.
Scooped by Sam Radcliffe
Scoop.it!

Harvard endowment chief Jane Mendillo will leave at end of year

Harvard endowment chief Jane Mendillo will leave at end of year | Timberland Investment | Scoop.it

The chief executive of Harvard University’s endowment, Jane Mendillo, said she will step down at the end of 2014, capping six years in which she had to steady and overhaul the world’s largest university investment fund after it lost billions in the financial crisis.
***
If Mendillo’s tenure was shorter than her board and university officials might have hoped, her tour of duty was also extremely demanding.

Mendillo walked into one of history’s most devastating market collapses and found Harvard’s investment group in disarray, due to heavy leadership turnover. By September that year, global markets were plunging. Mendillo, faced with an aggressively invested endowment, had to sell assets and pare back risky holdings to head off a cash crunch at the university.
***
Harvard has not yet released its performance for the latest fiscal year, which ends June 30, but it estimates an average annual return of 11 percent to 12 percent for the past five years on Mendillo’s watch.

That doesn’t include her first year, when the endowment lost 27.3 percent of its value, or about $10 billion, in the market collapse of 2008-2009. For the five years from 2008 through 2013, Harvard’s average annual return was 3.3 percent, underperforming the 3.8 percent average among large universities, according to the NACUBO-Commonfund Study of Endowments.


Directors said it’s hard to pin all the performance on Mendillo, given that her predecessors -- Jack Meyer and Mohamed El-Erian, as well as the interim directors -- laid the groundwork for a large part of the portfolio. While both men enjoyed strong returns during their tenures, Mendillo inherited some investments that have fared poorly since the crash.

Sam Radcliffe's insight:

Mendillo has long been an advocate of investing in timber and natural resources. Harvard missed its benchmark return for these assets in 2013 http://harvardmagazine.com/2013/09/harvard-endowment-up-2-billion-to-32-7-billion

more...
No comment yet.
Scooped by Sam Radcliffe
Scoop.it!

FSC Recertification of Harvard's Argentine Timberlands Doesn't Satisfy Activists

FSC Recertification of Harvard's Argentine Timberlands Doesn't Satisfy Activists | Timberland Investment | Scoop.it

Two Harvard-owned timberland plantations in Argentina that have attracted allegations of environmental and communal degradation have been reaffirmed with Forest Stewardship Council certification, which requires that the properties adhere to a comprehensive set of international principles regarding environmental, economic, and social impact.


The independent third-party Rainforest Alliance accredited the plantations, EVASA and Las Misiones, located in northern Argentina, on behalf of FSC.


The news comes as the Responsible Investment at Harvard Coalition, which co-authored a report criticizing the University’s timberland management practices in the region, hosts two Argentinian organizers to raise awareness of the issue on campus. On Sunday, those organizers called into question the rigor of the FSC certification and lodged additional complaints against Harvard Management Company.

“We've known that the plantations have technically been certified,” Blake A. McGhghy ’17, a student leader of Responsible Investment, said. “This is not new news. But it also does not change our campaign.”


Members of the student activist organization said that the FSC certification, which is voluntarily sought by an organization, is not sufficient in determining whether basic human rights and environmental practices are upheld. The certification audit also raised several new points of non-compliance, which must be remedied by at least the next year or HMC will lose its certification.

more...
No comment yet.
Scooped by Sam Radcliffe
Scoop.it!

Harvard Puts Romanian Timberland Associated with Bribery Case Up for Sale

Harvard Puts Romanian Timberland Associated with Bribery Case Up for Sale | Timberland Investment | Scoop.it

Harvard has put a large portion of its controversial forest holdings in Romania up for sale, according to documents filed in the country at the end of January. The documents advertising the sale were posted in Romanian provinces two days after Dragos Lipan Secu, a former contractor for a University subsidiary, was arrested on charges of bribery and money laundering.


Scolopax, a Romanian company owned by Phemus Corporation, a subsidiary of the Harvard Management Company, posted the fliers at the end of January in 21 Romanian provinces.
***
Secu allegedly committed the crimes while purchasing timberland on behalf of the University between 2007 and 2009. University spokesperson Kevin Galvin wrote in a statement in late Januray that Secu’s relationship with Harvard ended in 2012. Romanian authorities say Secu conspired with sellers to artificially inflate the price the timberland in exchange for a series of bribes, including 4.45 million lei, or $1.3 million, a 2007 trip to the Canary Islands, and a Chrysler Sebring car.
***
Scolopax is attempting to sell over 32,000 hectares, according to the documents. It is unclear what percentage of Scolopax total holdings this figure represents, but in 2010 Sven Rutgersson, a Scolopax official, said that the company owned “around 35,000 hectares of forest and 2,000 hectares of farming land.” According to data from Romania’s Environment Ministry sent to Ziarul Financiar, a Romanian financial newspaper, those holdings made Scolopax the second-largest owner of forestland in the country, behind the government.
***
Scolopax’s assets totaled more than $126 million in 2011, according to University tax filings. It began purchasing timberland in Romania in 2005, a few years after the University first began investing in timberland in 1997.

more...
No comment yet.
Scooped by Sam Radcliffe
Scoop.it!

Harvard Overpaid for Timber as Romanian Agent Held for Bribery

Harvard Overpaid for Timber as Romanian Agent Held for Bribery | Timberland Investment | Scoop.it

An investment agent who represented Harvard University faces charges in Romania that he took more than $1 million in bribes to induce the school to buy forest land at inflated prices.


Dragos Lipan Secu arranged with unnamed sellers to artificially boost prices that Scolopax, a Harvard-owned company, paid for timberland between 2007 and 2009, anti- corruption prosecutors said in a statement Jan. 21, the day after Lipan Secu was arrested.

***

The matter is an unseemly one for Harvard, the world’s wealthiest university, which prides itself at identifying esoteric investment opportunities such as third-world forestry, said Jack Lutz, a consultant on timberland investing at Forest Research Group in Rowley, Massachusetts.


“They’re going into some risky places but maybe here’s one that isn’t going to work out well for them,” said Lutz, who formerly worked for Boston-based Hancock Timber Resource Group, the world’s largest timberland manager for institutional investors.

***

Harvard Management has been increasing investments in natural resources in foreign countries, including timberlands that are farmed for paper and wood products.


Jane Mendillo, president and chief executive officer of Harvard Management, began exploring timberland as an investment in the 1990s when she was a vice president. The company sold its U.S. tree farms in the past decade and began making similar purchases overseas, including in New Zealand and most recently in Brazil.


Ziarul Financiar, a daily newspaper based in Bucharest, reported in 2011 that Harvard had emerged as the largest owner of forests in Romania after the state government, controlling 35,000 hectares through Scolopax, as well as 2,000 hectares of farmland in the country. 


more...
No comment yet.
Scooped by Sam Radcliffe
Scoop.it!

Time to Ditch the Yale Endowment Model 

Time to Ditch the Yale Endowment Model  | Timberland Investment | Scoop.it

Institutional investors are different from you and me -- they have a lot more money. Pension plans in rich countries manage almost $30 trillion in assets, for example. This opens doors at the offices of hedge funds, private-equity firms and other expensive money managers and creates opportunities to directly invest in projects inaccessible to regular people, such as dams, natural-gas fields and real-estate developments. 

***

One implication of Swensen’s ideas is that institutional investors should concentrate their portfolios in assets that aren’t traded on public markets. As of June 2012, about two-thirds of Yale’s endowment was invested in gas fields, timber forests, real estate and private equity. These illiquid assets are difficult to sell on short notice without offering steep discounts. Investors are supposed to get compensated for taking this risk with higher returns. That’s attractive to institutions because, in theory, they don’t need to worry about accessing their money at short notice.


In practice, institutional time horizons are often shorter than one might expect. Endowment disbursements are the single biggest source of revenue at rich schools like Yale, Harvard and Stanford, which were among the first to adopt this strategy. Pension plans exist to pay income to beneficiaries on a regular schedule. These obligations should be offset by liquid assets that provide stable cash flows. Instead, many institutional investors pretend that they can endure large swings in the value of their illiquid holdings.


This self-deception works well as long as asset values keep rising. It’s easy enough to persuade bankers to accept a timber forest in Eastern Europe as collateral for a loan when they are confident that they can always sell it to someone else at a higher price. This allows institutions to transform illiquid assets into cash without having to go to the trouble of trying to sell them to someone.

***

The potential for a mismatch between assets and liabilities is one big problem with the Yale model. Another is the focus on hunting for the best hedge funds, private-equity managers and stock pickers. This is where most of the money is made (and lost) in the endowment business. According to the Yale endowment’s most recent report, “nearly 80 percent of Yale’s outperformance relative to the average Cambridge Associates endowment was attributable to the value added by Yale’s active managers, while only 20 percent was the result of Yale’s asset allocation.” That’s great for Yale, but it’s impossible for every institution to have the best managers.

more...
No comment yet.
Scooped by Sam Radcliffe
Scoop.it!

Foreign investor buys into Kaingaroa Forest

Foreign investor buys into Kaingaroa Forest | Timberland Investment | Scoop.it

The Public Sector Pension Investment Board, one of Canada's largest pension investment managers, has bought 30 per cent of the shares in Kaingaroa Forest from Harvard Management Company, the endowment fund of Harvard University.

Harvard had a 60 per cent stake in Kaingaroa Forest and will retain a 28.75 per cent stake in the Forest.

As part of the transaction, the New Zealand Superannuation Fund had bought an additional 1.25 per cent stake, taking its total to 41.25 per cent.

The change in shareholding which was settled last week followed approval by the Overseas Investment Office in April.

more...
No comment yet.
Scooped by Sam Radcliffe
Scoop.it!

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.
more...
No comment yet.
Scooped by Sam Radcliffe
Scoop.it!

Harvard Endowment Director Says to Buy Natural Resources

Harvard Endowment Director Says to Buy Natural Resources | Timberland Investment | Scoop.it

Jane Mendillo of Harvard Management Company, which manages Harvard University’s $32 billion endowment, told the gathering of investors at the Delivering Alpha Conference last week that she looks at an increasing world population, and a wealthier middle class in developing countries, and believes that the demand for natural resources such as timber, food, and water will increase in the long term. Therefore, she is bullish on companies that do business in related industries, calling natural resources “our favorite area.”

more...
No comment yet.
Scooped by Sam Radcliffe
Scoop.it!

Harvard’s changing investment practices to cost half of endowment-staff jobs

Harvard’s changing investment practices to cost half of endowment-staff jobs | Timberland Investment | Scoop.it

Harvard University’s endowment is expected to outsource management of most of its assets and lay off roughly half the staff, in a radical overhaul of the way the world’s wealthiest school invests its money.

According to people familiar with the matter, about half the 230 employees at Harvard Management Co. will leave as part of a sweeping change by the university’s new endowment chief, N.P. “Narv” Narvekar. The endowment will shut down its internal hedge funds and let go traders by the middle of the year, said one of the people, with other layoffs occurring by year-end.

***

The internal team in charge of direct real-estate investments is expected to spin out into an independent entity that Harvard is expected to invest with. Only management of Harvard’s natural resources portfolio and passively managed exchange-traded funds will remain in house.

more...
No comment yet.
Scooped by Sam Radcliffe
Scoop.it!

Harvard endowment returns -2% for fiscal year, below its benchmark

Harvard endowment returns -2% for fiscal year, below its benchmark | Timberland Investment | Scoop.it

Harvard University's endowment posted a -2% return and was valued at $35.7 billion for the fiscal year ended June 30, said a report issued by Harvard Management Co., which oversees the endowment for the Cambridge, Mass.-based university.

In the endowment's annual report, Robert Ettl, interim president and CEO at HMC, said the “disappointing returns” were due in part to the “low-interest-rate environment and market volatility of the past fiscal year,” as well as “execution” of its investments.

Harvard's real estate investments returned 13.8% in the year, above a custom benchmark that returned 9.4%, said the endowment's annual report. Fixed income, meanwhile, returned 5.5%, vs. its benchmark of 6.2%.

Private equity returned 2.6% vs. 2.2% for its benchmark; absolute return, -1.2% vs. -0.3%; natural resources, -10.2% vs. 1.4%; and public equities, -10.2% vs. -6.1%.

Mr. Ettl added in an accompanying news release: “We have taken clear steps to strengthen our organization and improve investment performance over the long term. In our public equities portfolio, we have refined our strategy to emphasize deeper relationships with external managers. Within natural resources, we have hired a new head of the portfolio with significant agriculture and timber investment experience who will continue to evolve HMC's strategy and suite of manager relationships.” Colin Butterfield was named managing director, head of natural resources, effective in early October.

more...
No comment yet.
Scooped by Sam Radcliffe
Scoop.it!

A second high-paid Harvard endowment executive announces departure

A second high-paid Harvard endowment executive announces departure | Timberland Investment | Scoop.it

Harvard Management Co.’s head of natural resources investments, Alvaro Aguirre, “has decided to leave the company,’’ the endowment’s chief executive told employees in an e-mail Tuesday.


The announcement came just a week after the nation’s largest university endowment reported a modest 5.8 percent investment return for fiscal 2015. The endowment’s chief, Stephen Blyth, called out natural resources in his annual review letter as an area in need of improvement, with “generally subdued returns.”


Blyth said Satu Parikh, head of commodities, will oversee the natural resources portfolio in the interim.


Aguirre’s departure is the second departure announced in three weeks. The group’s head of alternative assets and a timber specialist, Andrew Wiltshire, plans to retire later this year. It’s unclear whether he will be replaced. Aguirre and Wiltshire were the third- and fourth-highest compensated executives at Harvard Management in 2013, the latest year reported, earning $9.6 million and $8.5 million respectively.

more...
No comment yet.
Scooped by Sam Radcliffe
Scoop.it!

Harvard Exits Romanian Timber Woes, Selling Forests to Ikea

Harvard Exits Romanian Timber Woes, Selling Forests to Ikea | Timberland Investment | Scoop.it
Harvard University’s endowment arm sold 33,600 acres of forest to Ikea Group, exiting a foray into Romanian timberland.
Harvard Management Co.’s strategy of investing in overseas forestry went awry in Romania, where an agent it hired was convicted of bribery and money laundering in June last year. Prosecutors said the agent arranged with sellers to inflate prices that Harvard-owned Scolopax Srl paid for timberland in exchange for $1 million in cash. He denied committing any crime.
“It highlights the outsize risk of going into these frontier markets,” said Joshua Humphreys, president of the Croatan Institute, a social and environmental research group in Durham, North Carolina.
Paul Andrew, a spokesman for Harvard, declined to comment.
Scolopax put the land up for sale in late 2013, asking for about 383 million lei, which was then equal to about $116 million. A spokesman for Ikea declined to say how much it paid for the land.
The purchase makes Ikea the biggest private forestry owner in Romania and gives it a local source of wood for manufacturing.
more...
No comment yet.
Scooped by Sam Radcliffe
Scoop.it!

Harvard fund loses natural resources manager

Harvard fund loses natural resources manager | Timberland Investment | Scoop.it

Matt Ciaschini, who oversaw $700 million of natural resource investments at Harvard University's endowment, has resigned, bringing departures of money managers to at least four since May. 

Ciaschini, a vice president at Harvard Management Co., said Friday that he left last month for personal reasons to join Newark, N.J.-based Prudential Financial Inc.'s agricultural investments group. Harvard reassigned his responsibilities and doesn't plan to replace him, said Christine Heenan, a spokeswoman for the university. 

more...
No comment yet.
Scooped by Sam Radcliffe
Scoop.it!

Students Rally Against Harvard's Management of Timber Plantations in Argentina

Students Rally Against Harvard's Management of Timber Plantations in Argentina | Timberland Investment | Scoop.it

The Responsible Investment at Harvard Coalition held a rally Friday afternoon on the steps of Widener Library and Massachusetts Hall to protest the University’s management of timber plantations it owns in Argentina. The rally comes after much debate over the plantations, including allegations of mismanagement in the fall and the announcement of the recertification of the plantations last week.


Throughout the afternoon, students and community members chanted, marched, and held signs, which read “Harvard be transparent,” “Faust: no more land grabs,” and “We’re yelling timber, you better move.”

After several members of the Harvard community, including the Undergraduate Council President and a Harvard alumnus working on the City Council, spoke to the protesters gathered in front of Widener, the group marched to Massachusetts Hall, which houses the University’s central administration and President Drew G. Faust’s office. A delegation from the group entered Massachusetts Hall with a petition containing 1,150 signatures, formally asking Faust to change the University’s management of its plantations.


The protests were a part of Responsible Investment at Harvard Coalition’s week-long SHAME Tour, which seeks to “stop Harvard’s Argentine mismanagement and exploitation,” according to the organization’s website. As part of the demonstration, the coalition flew two leaders from local communities in Argentina, Adrian Obregon and Emilio Spataro, 4,884 miles to Harvard’s campus.

more...
No comment yet.
Scooped by Sam Radcliffe
Scoop.it!

New Zealand Superannuation Fund sells 2.5% stake in Kaingaroa Timberlands

New Zealand Superannuation Fund sells 2.5% stake in Kaingaroa Timberlands | Timberland Investment | Scoop.it

The New Zealand Superannuation Fund (NZSF) has sold a 2.5% stake in Kaingaroa Timberlands, New Zealand’s largest forestry business, to six central North Island iwi. Effectively, the NZSF reduces its forest business stake from 41.25% to 38.75%. Other institutional investors in Kaingaroa Timberlands include Canada’s Public Sector Pension Investment Board and the Harvard Management Company, the manager of Harvard University’s endowment. The six iwi representative organizations, Ngati Rangitihi, Ngati Whakaue Assets and Te Arawa River Iwi Limited Partnership, Ngati Whare, Raukawa, Te Arawa Group Holdings Limited and Tuwharetoa, have formed Kakano Investment Limited Partnership to acquire and hold the stake.


An iwi is a social unit in Māori culture.


In 2008, in the biggest Treaty settlement to date, the Crown returned 176,000 hectares of land to the central North island iwi. 90% of Kaingaroa Timberlands tree crop is on returned land.


The CEO of the New Zealand Superannuation Fund (NZSF) mentioned in a press release that there is a strategic benefit for the landowners of the forest to have a stake in Kaingaroa Timberlands.

more...
No comment yet.
Scooped by Sam Radcliffe
Scoop.it!

Stars align for NZ foresters as 'wall of wood' comes on stream, prices reach record highs

Stars align for NZ foresters as 'wall of wood' comes on stream, prices reach record highs | Timberland Investment | Scoop.it

New Zealand forest growers, long overshadowed by booming returns from the dairy industry, look set to cash in on record prices for logs as they prepare to harvest trees planted in a flurry of activity two decades ago.


Forestry plantation activity in New Zealand jumped between 1992 and 1998, as a surge in Asian log prices lured investment syndicates to the sector. Radiata pine, which makes up about 90 percent of the nation's plantations, are typically felled between 26 and 32 years, meaning the "wall of wood" will start being harvested from about 2018, according to government figures.
***
China is underpinning New Zealand commodity price strength as Asia's largest economy undergoes urbanisation, growing incomes and demand for better housing, says ASB rural economist Nathan Penny.


Forestry exports to China rose more than 50 percent in 2013, putting New Zealand ahead of Russia as the biggest seller of logs into that market. Russia's log exports have dipped as a result of an export tax aimed at stimulating its domestic timber processing industry. At the same time, shipments from the US and Canada have dwindled as demand picked up in their home markets.
***
While an increase in supply in coming years may put some pressure on prices, foresters have the ability to stagger harvests and continued Chinese demand is likely to underpin the sector, Penny said.
***
Increased demand in New Zealand from the rebuilding of earthquake damaged Christchurch and a surging Auckland housing market are also adding to wood demand and supporting prices, Penny said. New Zealand exports of logs and wood surged 22 percent last year to $3.86 billion. In comparison, meat exports rose just 2.2 percent to $5.28 billion and dairy exports increased 17 percent to $13.4 billion. The Wood Council of New Zealand, which represents forestry and wood processors, aims to triple export earnings to $12 billion by 2022.

***
The New Zealand Superannuation Fund partnered with Harvard Management Company, the endowment fund of Harvard University, and the Public Sector Pension Investment Board, Canada's largest pension investment managers, for the harvesting rights to the 178,000 hectare Kaingaroa Forest, New Zealand's largest plantation forest and one of the largest contiguous plantation forests in the Southern Hemisphere.

The NZ Super Fund valued its 41.25 percent stake in Kaingaroa at $1 billion as at June 30, saying it has delivered an 18.05 percent return since it was purchased in 2006.


Other large plantations are owned by US-based Hancock Natural Resource Group, the world's largest timberland investment manager which bought 260,000 hectares of forests from Carter Holt Harvey, and Matariki Forests, a consortium managed by US-based Rayonier which owns 130,000 hectares of forests, according to Forest Owners Association records.


Demand for logs from China is hurting the local sawmilling industry as forest owners send their logs overseas rather than sell them to local processors, according to the New Zealand Timber Industry Federation.


Some 40 sawmills have closed since 2003, according to the New Zealand Forest Owners Association. In October, the Tachikawa Forest Products sawmill in Rotorua was put in receivership with the loss of 120 jobs.

more...
No comment yet.
Scooped by Sam Radcliffe
Scoop.it!

Why Yale, Harvard And Sovereign Funds Are Changing Their Views On Alternative Assets

Why Yale, Harvard And Sovereign Funds Are Changing Their Views On Alternative Assets | Timberland Investment | Scoop.it

You would call them the smartest guys in the room, had Enron not ruined the term for at least a generation. The big US endowment funds, those of Yale University and Harvard University   in particular, are considered the benchmarks for patient, smart, long-term investment, reflecting the brainpower of the institutions they fund.

***

But there is a sense that the world’s longest-term allocators, the sovereign wealth funds and endowments, have started to think again about the allure of private equity and other alternatives.

Also in September, Jane Mendillo, who is president and CEO of the Harvard Management Company which oversees the $32.7 billion endowment fund there, sent a note complaining that private equity allocations had been underperforming the public equity markets. “When we invest in private equity, we lock up Harvard’s money for multiple years,” she wrote. “In exchange for that lock-up, we expect to earn returns over time that are in excess of the public markets – an ‘illiquidity premium’.” 

***

A look at the world’s sovereign wealth funds shows that they are so far keeping the faith with private equity, but are showing a clearer delineation between different types of alternative assets, with infrastructure very much in favour, and hedge funds very much not.

***

When asked which asset class was likely to attract the most mandates from sovereign wealth funds in the next 12 months, the bulk, 64%, said alternatives. But when the question was refined to say which alternatives, 60% went for infrastructure, 40% private equity, and none whatsoever hedge funds, commodities or other alternatives.

***

So what, in sum, do the smartest minds in the world think? It appears they still like private equity, but are keeping a close eye on whether they are getting sufficient return for the illiquidity involved...

more...
No comment yet.
Scooped by Sam Radcliffe
Scoop.it!

Harvard endowment total portfolio return up, but natural resources misses benchmark

Harvard endowment total portfolio return up, but natural resources misses benchmark | Timberland Investment | Scoop.it

HIGHLIGHTS:

  • Harvard Management Company records 11.3 percent investment return on endowment assets during fiscal year 2013, after negative return in prior year.
  • Public-equity assets lead positive returns; positive fixed-income returns despite a down bond market; real assets only category to trail benchmarks.
  • Harvard’s overall performance exceeds its market benchmarks by 223 basis points and comes close to returns recently reported by some other institutions.

***

For the real-assets category as a whole, the investment return was 7.0 percent—the only segment to trail the market benchmark (albeit slightly).  Real estate, driven by HMC’s direct investments (as opposed to those made through outside investment managers) again produced strong results, yielding a 10.6 percent return (ahead of the 8.8 percent benchmark return). Natural resources returned 5.1 percent, lagging the benchmark by 2.5 percentage points, an atypical result for HMC in this category. 

more...
No comment yet.
Scooped by Sam Radcliffe
Scoop.it!

Why Harvard Spends Billions on New Zealand Timberland

Why Harvard Spends Billions on New Zealand Timberland | Timberland Investment | Scoop.it

The stock market rise has been dubbed by some the “idiot-maker rally,” for its gravity-defying gains despite a lack of fundamentals. Nevertheless, the Dow (DJI) now sits above 15,000 and the S&P 500 (^GSPC) above 1600, both up more than 14% this year.


When you look at the smart money, though, how are they actually making impressive returns?


Take the Yale endowment. It’s up 100% over the last decade, according to Bob Rice, author of The Alternative Answer. But in 2012, just 6% of Yale’s portfolio was allocated to U.S. equities. Half was invested in absolute return, private equity, and real asset strategies – all alternative investments - while another chunk was in emerging markets.

***

Harvard, as another institutional example, has 10%, or $3 billion, of its endowment in timber, according to The Alternative Answer. In fact, it’s the biggest timberland owner in New Zealand.


Meanwhile, the average person may be taught the ideal portfolio contains 60% stocks and 40% bonds, with these asset classes representing the best returns in the long-run.

***

Rice contends that the conventional wisdom about stocks and bonds is skewed. He says in the 11 decades since 1900, the 60/40 portfolio has returned “a grand sum of 1% after inflation” in seven of the decades. And while you get big bursts like in the 1980s, this distorts the long-term averages, and not everyone can wait it out 30 to 40 years so that the timing works out like it’s supposed to.

***

In Rice’s view the good news is that because of changes to laws and new products, the average person can now access some of the “same kinds of things the big boys have been investing in all along and what has carried them so far.”

***

In the accompanying video, he gives more details and responds to the more traditional investing gospel of gurus such as Suze Orman and Warren Buffett.

more...
No comment yet.
Scooped by Sam Radcliffe
Scoop.it!

Can Timber Rebuild Harvard's Endowment?

Can Timber Rebuild Harvard's Endowment? | Timberland Investment | Scoop.it

Jane Mendillo boarded a turboprop plane in Brasília in April and flew deep into the Brazilian countryside. The flight took her over dirt roads running through endless hills and valleys and unimaginably beautiful wilderness. But Mendillo, head of Harvard University’s $32 billion endowment, wasn’t there to sightsee. She was visiting tree plantations and inspecting Harvard’s holdings.

...

Harvard’s endowment started buying U.S. forestland in 1997, when Mendillo—then a member of the investment team—recommended the purchases to her then-boss Jack Meyer. Now Mendillo, 54, is trying to remake the endowment after the world’s richest university suffered a $10 billion loss on its investments in 2009, a 27 percent drop that was the worst for any school. 

more...
No comment yet.