Timber Industry Begins Rebound, Aided by Recent US Housing Recovery. The fortunes of the timber industry wax and wane with that of the housing industry, so it isn’t surprising that as the housing industry begins its recovery, the timber industry is recovering as well.
The National Council of Real Estate Investment Fiduciaries (NCREIF)’s timber index, which includes 443 investment grade properties with over 15 million acres and more than $26 billion in market value is a good barometer for the industry, says Jeffrey Havsy, research director at NCREIF in Chicago.
According to the fourth quarter 2012 report on the timber index by NCREIF, the total return for the category was 5.92%, the highest since fourth quarter 2007. The return was split between 5.33% appreciation and .59% income. For the year, timberland had returns of 7.76%, split between 2.68% in income and 4.97% in appreciation.
NCREIF’s timber index has 317 properties in the South, 86 in the Pacific Northwest, 15 in the Lake States and 20 in the Northeast. While there may be a lot of timberland in other states, it is not covered by NCREIF’s timber index, because the land is owned by REITs, such as Plum Creek or Weyerhaeuser, or large, private owners, instead of investment managers, says Havsy.
The last time appreciation in the timber index was greater than 5% was in fourth quarter 2007 when timberland appreciated by 8.71%, according to the NCREIF report. Even though the index had three consecutive quarters of positive appreciation, it remains more than 5% below its previous peak. The Pacific Northwest continues to be the strongest region with a total return of 10.02% of which .97% was income. This marks the sixth consecutive quarter in which it was the leading region in the index, according to the report.
By Hortense Leon, World Property Channel on February 5, 2013 8:00 AM
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