NEWSLETTERS

IWC Newsletters typically discuss broader timberland related investment trends.

IWC NEWS 43, APRIL 2016

Interest alignment in institutional private timberland investments

Timberland investment management organizations (TIMOs) have historically designed their structure, terms and conditions based on the private equity fund model. Through the years, IWC has built experience with this model, paying particular attention to LP-GP interest alignment within institutional timberland investment. This article outlines and organizes potential misalignment issues that we have identified and includes examples and consideration regarding how alignment of interest could potentially be improved, compared to current market practices.

Note: If you have received the printed version, there is an error in Figure 2 in the Commodity Prices article (Price deviation from trend, shown in yellow). This has been corrected in the online version.

 

IWC NEWS 42, DECEMBER 2015

Different vehicles to navigate the timberland investment environment

The means to access timberland investment are gradually developing. To date, many investors have primarily been exposed to timberland through primary fund structures where investment decisions are vested with timberland investment management organizations, so called “TIMOs”. As the first generations of these funds come to an end and the asset class matures, investment options are increasing. The purpose of this article is to highlight some attributes of key investment vehicles that are now available to investors (depicted in Figure 1) and the ways in which they can be accessed. Among other learnings, the article emphasizes that a comprehensive forest investment understanding is vital to evaluate the underlying assets. Furthermore, broad exposure to the asset class is difficult to achieve on a stand-alone basis.

IWC NEWS 41, OCTOBER 2014

Signs of change how increasing US mill capacity could drive up log and lumber prices

“If you build it, he will come.”

The quote from the movie Field of Dreams is related to baseball legends, but the metaphor also serves current log processing capacity and demand for wood products in the US. Just as Ray Kinsella felt redemption with finally being able to play catch with his father, so too are US lumber mills with increased economic activity in the US, including residential construction. Some talk of a supercyle, where demand outpaces supply and log prices increase quickly. For timberland owners, the prospect of increasing log prices (a driver of returns) is attractive. However, before increased prices materialize, end market demand and mill capacity increases are required; i.e. the “build it” part of our analogy. This article explores the growing interest and capacity of log processing facilities in the US and how this could affect log prices and eventually returns to timberland owners.

IWC NEWS 40, MAY 2014

How technology is returning to it’s roots

Look around and take in what you see: LCD computer screen? Halogen lamp? Blinking iPhone? Are you sitting on a chair made of plastic and synthetic upholstery? Or maybe you’re reading this article from printed paper, resting your arms on a wooden desk, while reclining on a wooden chair. The former scenario most likely reflects your situation, yet you would probably agree that the later sounds more appealing. Though modern technology has created today’s necessities, there is something to be said about the natural qualities of wood that can’t be replaced. This article provides examples of where wood has become the substitute for less environmentally friendly, less sustainable products of modern technology, and not the other way around. …

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IWC NEWS 39, JANUARY 2014

Why Asia’s wood deficit is important to timberland investors

In recent years, IWC has been stressing the importance of the Asian market to its clients; all the while advising on timberland investments that are largely situated outside the region. This begs the question: Why should the investor care about Asia? This article looks to answer this question with a simple example of supply and demand. …

IWC NEWS 38, JUNE 2013

Leasing land in a timberland investment portfolio

Owning timberland has become popular as an asset class due to its flexibility on entry/exit, as well as timing of harvests, which combined decrease the risks of negative returns and allow for higher upside potential compared to other investment alternatives without these characteristics. …

IWC NEWS 37, FEBRUARY 2013 – FOLLOW-UP EDITION

Tracking timberland investment development

Two years ago, The International Woodland Company (IWC) published a first article on the timberland funds and managers universe. Since that time, IWC’s knowledge of the timberland investment industry and extensive network has grown, enabling a more thorough analysis of the developments in timberland investment. This article provides depth to previous work by incorporating a selection of IWC’s updated data as of December 31, 2012, and additionally drawing distinction between offered and closed strategies. …

IWC NEWS 36, September 2012

NCREIF introduces a new timberland index

The National Council of Real Estate Investment Fiduciaries (NCREIF) Timberland Committee unveiled the NCREIF Timber Fund and Separate Account Index (TFSAI) in the first quarter of 2012, offering a new way to measure timberland performance. The TPI measures returns derived from individual properties, while the TFSAI measures returns from timber funds and separate accounts. Timber funds may consist of one property or several, and can include leases and timber deeds. The TFSAI will be a welcome compliment to the TPI because manager fees, cash held by the fund, and fund level expenses are included in the return calculation and therefore offer a more comparable return to those seen by investors. …

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