Timber REITs: Outperformed Other Real Estate, Equities and Commodities YTD

12 07 2011

In an earlier post (February 15, 2011), we wrote about the pace-setting performance of timberland-owning REITs, as measured by the Forisk Timber REIT (FTR) Index, vis-à-vis other asset classes. In revisiting this theme after close to two quarters of stomach-churning monetary and fiscal angst in global economic markets, we continue to find the timber REITs drubbing other core asset classes.

Gold, which started the year sluggishly, did benefit from concerns over the European debt crisis, slow US growth and rising inflation in emerging economies. These factors supported the worldwide thirst for Gold as a safe haven investment and inflation hedge.  It also resulted in a divergence between gold and other commodities which rely on industrial uses.

Safe haven investments also supported U.S. treasuries as global investors continue to focus on the European debt crisis while maintaining the belief that the U.S. government will break its impasse, and maybe strap on its big boy pants and break some bread, to lift the debt ceiling and avoid a ratings-damaging default.

Notwithstanding the concerns regarding housing markets in particular and broader markets in general, timberland-owning REITs have outperformed most other major asset classes year-to-date (see table).

These results reinforce the investors’ view of timber REITs as attractive for their long term value. While the cash flows remain muted during the housing slump, the timber assets continue to grow.

To learn more about timber REITs, participate in the “Investing in Timber REITs” workshop.

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