Forisk’s Equity Research and Timber REITs in the Spotlight

5 04 2012

As of March 30th, publicly-traded timberland-owning REITs, as measured by the Forisk Timber REIT (FTR) Index, returned 11.45% year-to-date.  This culminated a month of coverage and articles that highlighted both Forisk’s equity research of timber REITs and the performance and characteristics of timber REIT investments generally.  Key takeaways included:

  • Individual timber REIT performance varies.  Clay Risher, in his REIT Magazine article “Planting the Seeds for Timber REIT Growth” (March 14, 2012), focused on this theme from our research.  While Rayonier (RYN) lapped the field in 2011 thanks to its specialty fibers business, other firms, such as Weyerhaeuser (WY) have led in 2012.  In addition, he summarizes Steve Chercover’s thesis that timber REIT conversions have run their course for now….
  • Investing in timber REITs differs from investing in timberland.  Ellie Winninghoff, in her Financial Advisor Magazine article “Balance Sheets that Always Keep Growing” (March 28, 2012), summarizes our emphasis on the local and regional nature of timber REITs and timberland investment performance.  Geography matters for both publicly-traded and private-placement investment vehicles.  In the article, Winningham also captures Clark Binkley’s assessment of the realizable versus theoretic portfolio diversification benefits from timberland investments.
  • Timber REITs “were strong performers” this quarter, according to the Wall Street Journal, in the A.D. Pruitt article “Small REITs Put UP a Big First Quarter” (April 4, 2012).  While correctly recognizing recent timber REIT strength, this article was more notable for getting its facts and insights wrong on the sector.  For example, there are four (4) timber REITs (PCH, PCL, RYN and WY), not three (3) as reported (it’s unclear who got left out by A.D.).   And multiple factors outside of housing have driven recent timber REIT peformance….[A.D. – As Alvin the Chipmunk says, next time, “call me.” 🙂 ]
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