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.

 

Timberland Investor Archive

2014 Q4, Hancock Timberland Investor: Timberland Investment Performance

U.S. private timberland investments returned 10.5 percent in 2014, reflective of positive timberland investment fundamentals and solid prospects for future growth in U.S. sawtimber demand. As in prior years, we devote our fourth quarter issue of the Hancock Timberland Investor to a review of investment performance of U.S. private timberland properties. The highest profile measure of timberland performance in the U.S. is the NCREIF (National Council of Real Estate Investment Fiduciaries) Timberland Property Index, which reports returns for institutional investments throughout the United States.

Timberland Investor Archive

2014 Q3, Hancock Timberland Investor: Universe of Investable Timberland – 2014

Hancock Timber Resource Group (HTRG) periodically estimates the area and value of timberland that is potentially available for institutional investment. A quantified assessment of the value of global investable timberland provides both a benchmark to assess the scale of timberland assets relative to other asset classes, and a measure of the growth potential for the timberland asset class. Constructing a rigorous inventory of the global investable timberland universe provides a map of the geographic distribution of properties and values, and indicates the direction of future investment activity.

Timberland Investor Archive

2014 Q2, Hancock Timberland Investor: Timberland Returns in an Environment of Rising Interest Rates

In the wake of the last Global Financial Crisis (GFC), the Federal Reserve implemented the longest and most accommodating period of monetary policy in its history. Actions by the Federal Reserve included: holding the Fed Funds Rate (FFR) since December 2008 in a range between 0.00% and 0.25%; using the Term Asset Backed Securities Loan Facility (TALF), to lend up to $1 trillion to purchasers of asset backed securities between March 2009 and June 2010; and implementing a series of Quantitative Easing programs, whose purchases of securities have boosted the total assets on the Fed’s balance sheet from $865 million in August 2007 to $4.3 trillion in May 2014.

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.

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