NCREIF Timberland Index returned 1.52 percent for fourth quarter, up from 0.60 percent last quarter and 1.18 percent in the fourth quarter 2016, according to the National Council of Real Estate Investment Fiduciaries.
The EBITDA return, at 0.74 percent, remained the same as last quarter and was slightly higher than 0.68 percent a year ago. The fourth quarter saw relatively higher appreciation compared to the last four quarters, at 0.78 percent.
Approximately 3.63 percent was both the trailing year and 2017 annual total return. EBITDA drove this year’s returns at 2.77 percent. Appreciation returns for the year were 0.84 percent.
The Northwest led regional returns for both the fourth quarter and for the full year. The total quarterly return for the Northwest was 3.85 percent, supported by appreciation returns of 2.86 percent. The Lake States were a laggard this quarter after seeing significant appreciation returns in the final quarter of 2016. The total quarterly return for the Lake States was -3.04 percent, driven by a negative appreciation return of -3.56 percent.
Timberland market value per acre, at $1,808 as of the fourth quarter, has trended steadily up over the last three years due to deal activity in the South and Northwest. In particular, recent deals such as Roseburg’s acquisition of 158,000 acres in the South will impact appreciation returns via appraisals1. That acquisition was at an estimated $2,025 per acre, well above the $1,775 average value per acre in the South for the fourth quarter2. The Lake States, on the other hand, have continued to see per acre values decrease over time to $686 for the fourth quarter, close to year-end 2013 values.
The NCREIF Timberland Index consists of 464 investment-grade timber properties with a market value of $25.5 billion. This includes 317 properties in the South, 95 in the Northwest, 35 in the Northeast, and 16 in the Lake States. This data enhances the ability of institutional investors to evaluate the risk and performance of timberland investments across the United States.
