Steady income supports modest timberland performance in second quarter
The National Council of Real Estate Investment Fiduciaries released second quarter 2017 results of the NCREIF Timberland Index. The index returned 0.70 percent for the quarter, down from 0.76 percent last quarter and 0.98 percent in the second quarter 2016. The EBITDDA return, at 0.62 percent, was essentially flat in comparison to 0.63 percent last quarter and 0.61 percent a year ago. After a flat year for appreciation in 2016, timberland has only had marginal appreciation thus far in 2017, at 0.13 percent in the first quarter and 0.08 percent in the second quarter.
For the trailing year, the annual total return was 3.35 percent, compared to 3.39 percent for the year ending second quarter 2016. The annual total return was comprised of a 2.64 percent EBITDDA return and 0.70 percent appreciation.
The Northwest led regional returns in the second quarter by a wide margin with a 1.47 percent total return, followed by the Lake States at 0.57 percent. The Northeast and South total returns, at 0.48 percent and –0.32 percent, respectively, were limited by depreciation in the second quarter.
Timberland market value per acre rose to $1,824 in the second quarter, which is the highest valuation since third quarter 2009. The Northwest supported the increase with a jump to $2,778 per acre in the second quarter from $2,678 last quarter and $2,586 a year ago. South market value per acre has been relatively steady at about $1,780 since 2015. The Northeast ($1,181) and Lake States ($711) saw little movement in values over the quarter, but regional values per acre were down 5.1 percent and 2.4 percent, respectively, over the past year.