Research

Research plays a crucial role in all phases of our investment process from acquisitions to dispositions.

In-house and collaborative research underlies nearly all of our investment decisions. We write and produce several research documents on a regular basis. These publications are used to educate potential investors, while keeping our current clients informed of topics that may be relevant to their portfolio.

All of our in-house research publications are now accessible to the public.

Timberland Investor Archive

2013 Q4, Hancock Timberland Investor: 2013 Timberland Performance

At 2013 year end, the NCREIF Timberland Property Index posted a total annual return of 9.7 percent. Stronger timber demand in the U.S. and China supported modest growth in timber income, while capital appreciation on timberland properties benefitted from upward adjustments in property appraisals. The principal driver of the stronger timberland returns achieved in 2013 was reductions in the discount rates used by appraisers in their property valuations, based on higher levels of confidence in the prospects for both wood products and timberland markets.

Timberland Investor Archive

2013 Q3, Hancock Timberland Investor: Historical Perspective on the Relationship between Timberland Returns and Inflation

Not since the 1970’s has the U.S. experienced sustained high inflation. For the past thirty years, the U.S. has enjoyed an extended period of moderate inflation, with the annual change in the Consumer Price Index (CPI) ranging from 6.2 percent in 1982 to a low of -0.3 percent in 2009. Following the Global Financial Crisis (GFC) in 2008, the threat of slipping into a period of deflation was a more pertinent concern than a resurgence of inflation.

Timberland Investor Archive

2013 Q1: Pacific Northwest Log Markets and the Changing Role in Chinese Demand

China’s growing appetite for log and lumber imports has changed the dynamics of timber markets in western Oregon, Washington, and British Columbia over the past few years. Rising volumes of log exports to China from the U.S. West Coast and lumber from BC has increased market tension, supporting higher timber prices. Yet, last year’s slowdown in China highlighted concerns about the sustainability of China’s recent growth trajectory and questions about its future needs for imported logs and lumber.

Timberland Investor Archive

2012 Q4: 2012 Timberland Performance

Timberland property values experienced stronger gains this year as appraisers gave credit to strengthening timberland fundamentals, improved transaction flow and rising transaction prices. As in prior years, we devote our fourth quarter issue of the Hancock Timberland Investor to a review of this year’s investment performance of private timberland.

Timberland Investor Archive

2012 Q3: Welcome to the expanded geographic coverage of the Hancock Timberland Investor Newsletter

The Hancock Timberland Investor (HTI) newsletter has been published since 2000, always including a set of reoccurring charts monitoring timber and timberland markets, tracking costs, prices, demand
drivers, and returns.

Timberland Investor Archive

2012 Q2: Will the current rally in North American lumber and plywood prices set the state for improving timber values?

The strong pricing in 2012 for lumber and wood panels raises expectations for improved timber pricing in the remainder of this year and into 2013. North American softwood lumber and wood panel prices beat expectations this year with exceptionally strong performance. In the first 8 months of 2012, the Random Lengths Composite Index for North American softwood lumber averaged $338 per mbf, 27 percent above the same period in 2011. Softwood lumber prices this year sustained the strongest price performance since 2006.

Timberland Investor Archive

2012 Q1: Timberland Portfolio Allocation and the Mean-Conditional Value at Risk

Mixed asset portfolio optimization using mean-conditional value at risk as opposed to the traditional mean-variance approach continues to result in favorable portfolio allocations to timberland. The mean-variance portfolio optimization methodology introduced by Harry Markowitz (1952) has been extensively used by investment managers to assess performance of diverse asset classes. We have utilized efficient frontiers and risk-return plots to compare timberland performance to other assets for over 20 years. However, the theory of optimal asset allocation has advanced considerably and new methods have been developed to address some of the deficiencies of the mean-variance approach.

Timberland Investor Archive

2011 Q4: U.S. Timberland Performance in 2011

Private timberland performance in the U.S. ended the year with regional investment returns moving in opposite directions. The Pacific Coast states were busy supplying Chinese markets with logs and lumber, pushing up prices for both domestic and export logs in the region. Timberland owners in the U.S. South meanwhile, faced historically low timber prices and meager demand from wood product manufacturing facilities as a result of dismal U.S. construction demand.

Timberland Investor Archive

2011 Q3: Country Risk Analysis in Timberland Investments

Developing a structured framework for assessing risk factors is an important first step to successful global timberland investing. Timberland investing on a global scale can offer attractive alternatives for investors seeking diversification beyond the opportunities available within the domestic investment universe. As is typically the case in investing, however, higher returns come with added risks. And while geographic or country-specific conditions can positively impact investments, they can also lead to income volatility and principal losses.

Timberland Investor Archive

2011 Q4: Casualty Losses in Timberland Investments

The risk of catastrophic losses in timberland portfolios can be effectively mitigated with active forest management and portfolio diversification. Timberland properties occasionally suffer casualty losses from natural events such as fire, storms, and insect and disease outbreaks. In a 2010 Hancock Timber Research Brief, we discussed the risk of large scale losses in timberland investments caused by natural events in North America. In this issue of the Hancock Timberland Investor, we examine catastrophic losses on a global timberland portfolio and discuss available risk and loss mitigation strategies.

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