In 2018, only privately-owned timber investments generated positive returns among the timberland investment vehicles track by Forisk. Publicly-traded timber firms struggled. These include four real estate investment trusts (REIT)s: CatchMark Timber (CTT), PotlatchDeltic (PCH), Rayonier (RYN), and Weyerhaeuser (WY). However, the public timber REITs bounced back in 2019, returning 30.1% through the first ten months of 2019.
Annual Investment Returns
Let’s look at the numbers. The table below compares 2014 through 2018 annual and YTD 2019 performance of indices tracking the S&P 500, all publicly traded real estate investment trusts (NAREIT), private timberlands (NCREIF), and the public timber REITs in the Forisk Timber REIT (FTR) Index.
The year-by-year ranking highlights the shifting of capital and performance across sectors, with the volatile, periodic returns of equities (S&P, NAREIT and FTR) versus the relatively stable, positive returns of timberlands (NCREIF) since 2014. Private timberlands offer the only benchmark to generate positive returns for each of the past five years. Public timber REITs ended 2018 last with their first negative year since 2015, which was also the last year private timberlands led this set of benchmarks. Timber REITs bounced to the front in 2019, making up nearly all of the ground lost in 2018 as of October 2019.
Timberland Deal Flow
Meanwhile, timberlands continue to trade. From Q4 2018 through Q3 2019, our team tracked over 1.1 million acres of completed timberland transactions in the United States exceeding 1,000 acres in size. Most of these acres, almost 0.9 million acres, moved in deals exceeding 20,000 acres each. Regionally, most of the volume in acres (73%) occurred in the U.S. South. The West had 16%, while Canada and the North accounted for the balance.