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Timber market value holds up despite acreage slowdown

The market value for institutionally owned US timber was $24.3bn in the first quarter of this year.

The market value for the institutional US timberland market was $24.3 billion in the first quarter of this year with total acres traded at 13.4 million, according to the National Council of Real Estate Investment Fiduciaries.

Since a peak in market value in the last quarter of 2012, the number of acres traded in the US market has gradually slowed, although the market value has mostly maintained strength. The timberland market has lost $993 million in value since the end of 2012, while the amount of land went down 1.7 million acres.

Total returns – the EBITDDA return and capital appreciation return added together – are expressed as a percentage. In 2015, they were 2.9 percent, while they were 6.7 percent over 2014-2015. Since the last quarter of 1986 returns are calculated to be 12.19 percent, and in the last 20 years 7.5 percent.

In 2015 total returns in the US South were 4.31 percent, compared to 8.15 percent in the Northwest, 2.92 percent in the Northeast, and 2.28 percent in the Lake States. In 2010, total returns for the Lake States were 5.85 percent, -1.92 percent in the North-East, 2.83 percent in the North-west and -1.22 percent in the South. In general, southern timberlands consist of a more fast-growing forests used for saw timber and pulp, while slower-growing hardwood species used in high-value furniture and housing is more widespread in the North.

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Source: NCREIF.