Income continues to support timberland performance in third quarter
Other - OCTOBER 26, 2017

Income continues to support timberland performance in third quarter

by Andrea Waitrovich

The National Council of Real Estate Investment Fiduciaries (NCREIF) has released third quarter 2017 results of the NCREIF Timberland Index. The index returned 0.60 percent for the quarter, down from 0.70 percent last quarter and 0.67 percent in the third quarter 2016. The EBITDA return, at 0.74 percent, was up from 0.62 percent last quarter and 0.68 percent a year ago. After three quarters of slight appreciation, timberland experienced depreciation of 0.15 percent in the third quarter.

For the trailing year, the annual total return was 3.28 percent, unchanged from the year ending third quarter 2016. The annual total return was comprised of a 2.70 percent EBITDA return and 0.56 percent appreciation.

The Lake States led regional returns in the third quarter with a 1.02 percent total return as the only region experiencing appreciation for the quarter. The Northwest and South had slight depreciation for positive total returns of 0.90 percent and 0.63 percent, respectively. The Northeast had a negative total return with 2.15 percent depreciation and a 0.70 percent EBITDA return.

Timberland market value per acre, at $1,796 in the third quarter, has remained close to $1,800 per acre over the past three years, although trends vary by region. Northwest values continued to rise over the quarter and the year, to $2,809 per acre in the third quarter. The Northeast, meanwhile, saw values decline, to $996 per acre, from $1,181 last quarter and $1,243 a year ago. The Lake States and South had steady values per acre over the quarter.

The NCREIF Timberland Index consists of 476 investment-grade timber properties with a market value of $25.8 billion. This includes 330 properties in the South, 93 in the Northwest, 37 in the Northeast, and 15 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.

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